When buying an attached home (condo, townhome), part of the HOA fee goes toward the Master Insurance Policy. This policy typically insures the building’s structure and common areas, often covering units from the ‘studs out.’ This means owners are responsible for interior finishes, fixtures, personal belongings, and any damage occurring inside their unit, such as from fire, water, or other covered events. To fill these coverage gaps, you will likely need an HO6 policy.
While the Master Policy may cover the building’s exterior, most policies these days have high deductibles, which homeowners are usually responsible for paying. In our experience, these deductibles are typically split among all owners.
To prepare for these potential costs, you can either set aside savings or add Loss Assessment coverage to your HO6 policy. This optional coverage can help pay for special assessments due to insurance deductibles or other covered claims. Costs vary depending on location and policy details, but some homeowners can get $5,000 in Loss Assessment coverage for as little as $2–$10 per month. It’s worth checking with your insurance provider to see what options are available for your specific situation.
Please note that we are not insurance experts. Coverage details and rates change frequently, so use this as a guide to ask informed questions when speaking with your insurance agent.