When buying an attached home (condo, townhome, etc.), part of the HOA fee goes toward the Master Insurance Policy. The Master Policy covers liability & property coverage for the HOA. This policy DOES NOT cover the inside of each unit but does insure each unit from the “studs out.”
When buying an attached dwelling, you should consider adding an HO6 policy, which covers the unit’s contents and any damage from the “studs in” (e.g., kitchen fire damage, loss from theft).
Finally, while the Master Policy may cover the exterior of each building, the deductible is still the homeowner’s responsibility. This deductible used to be manageable, but now insurance companies more often than not charge 10% (or more) of the total cost of the work. Let’s say a hail storm hits, resulting in each building needing a new roof. And let’s say each roof costs $50,000 — for a total cost of $400,000. If there are 24 owners, and the deductible is $40,000, each owner will owe just under $1700 for their portion of the deductible.
You can either start saving now for this potential cost or invest monthly in Loss Assessment coverage, an optional add-on to the HO6 policy (our understanding is the H06 policy is a prerequisite to this coverage). As of this writing, we have recently seen people get about $5000 of coverage for around $10/month.
Please note that we are not insurance experts. Not only this, but insurance coverage, rates, etc., change rapidly. Please use this post as a guide for questions to ask your insurance agent. They are the experts.