What the master policy is actually supposed to cover
A master insurance policy is generally expected to cover the association's common areas and shared building elements — rooflines, exterior walls, hallways, elevators, pools, and shared mechanical systems — along with general liability protecting the association and its members if, for example, a guest is injured at the community pool. Many associations also carry directors and officers coverage as part of the same overall insurance program, though D&O is functionally a separate policy responding to a different kind of claim than the property and liability coverage. Requirements for exactly what must be purchased come from a combination of state law, the governing documents, and — often the most concrete driver in practice — mortgage lender standards, since lenders will decline to finance purchases in an underinsured community.
The 100 percent replacement-cost benchmark
A commonly applied standard for the property portion of the master policy is that coverage should equal at least 100 percent of the estimated replacement cost of the project's improvements, including both common elements and (for condominiums) the residential structures themselves. A board that hasn't had the replacement-cost figure independently appraised in several years — relying instead on an old figure simply carried forward and adjusted for inflation — risks discovering the gap only after a major loss, when it's far too late to fix cheaply.
Where the master policy stops and the owner's own policy begins
This boundary is one of the more common sources of confusion for both boards and owners. The master policy generally covers the building shell and common elements; it typically does not cover interior improvements, personal property, or personal liability inside an individually owned unit — that gap is exactly what an individual HO-6 (condo) or homeowner's policy is meant to fill. A board should be able to point owners to a clear, written explanation of this boundary, both to reduce disputes after a loss and to encourage owners to actually carry the HO-6 coverage the master policy was never designed to replace.
Confirm the applicable state and lender minimum coverage requirements → obtain a current replacement-cost appraisal, not an inflation-adjusted old figure → confirm the master policy actually meets the 100% benchmark → publish a clear master-policy-versus-HO-6 boundary explanation for owners → review deductible allocation language in the governing documents.
Deductible allocation is a separate decision the board controls
Who pays the master-policy deductible after a covered claim — the association as a common expense, or the unit where the loss originated — is generally determined by the governing documents, not the insurance policy itself. Boards that have never addressed this question in writing are setting up a dispute for the first claim large enough to matter; resolving it in a calm moment, before a loss, produces a far better outcome than negotiating it during an active claim.
What a complete master-policy file should contain
- A current, independently obtained replacement-cost appraisal.
- The master policy declarations page confirming coverage meets the applicable benchmark.
- The governing-document language on deductible allocation.
- A written explanation of the master-policy/HO-6 boundary for owner communications.
- Confirmation the policy includes liability and, where applicable, D&O coverage.
When to get professional help
An insurance broker experienced specifically with community associations — not a generalist commercial broker — should review the replacement-cost figure and coverage list annually, since underinsurance discovered only after a major loss can leave the association responsible for a funding gap it never intended to accept.