Your association's policy stops somewhere. Know exactly where.
A condo association covers the building, but not everything inside your walls or the liability that follows you. Here is what your own policy needs to do, why the limits matter more than the price, and what happens when the two policies leave a gap.
THE SHORT VERSION
Your condo policy, often called an HO-6, covers what the association's master policy does not, which usually starts at your interior walls.
Loss assessment coverage protects you when the association bills unit owners for a shortfall after a large loss.
In Massachusetts, personal liability of $500,000 and adequate interior and contents coverage are sensible floors, not ceilings.
What a condo policy is really doing
A condo policy is filling the space between you and the association's master policy. The master policy generally covers the building structure and common areas. Your policy covers the interior, your belongings, your liability, and the cost of somewhere to live if your unit becomes uninhabitable. The exact dividing line depends on the association's bylaws, which is why two condo owners can need very different coverage.
The most misread part is where the master policy stops. Some associations cover everything to the bare walls, leaving flooring, cabinets, fixtures, and improvements to you. Others cover the original construction but not upgrades a previous owner made. If your policy assumes more coverage from the association than the bylaws actually provide, the gap is invisible until a claim exposes it.
Why the pricier policy is often the better buy
Two condo policies can look alike and behave very differently. The cheaper one usually trims interior coverage, settles contents at actual cash value, skips or underfunds loss assessment coverage, or carries a thin liability limit. None of these choices is visible on a summary. They surface only when something goes wrong.
Loss assessment is the line people regret skipping. When a major loss hits the building and the master policy falls short, the association can assess every unit owner for their share. That bill can reach thousands or tens of thousands of dollars. A small amount of loss assessment coverage turns a surprise expense into a covered one.
The overall math mirrors every other policy. Raising interior limits, choosing replacement cost, and adding loss assessment is usually a modest annual difference. The exposure on the other side is a rebuild of everything inside your unit plus a possible assessment. Paying slightly more removes that whole category of risk.
Real-World Example
A burst pipe upstairs and an assessment nobody expected.
A pipe failed in a unit on an upper floor and water ran down through several units below. The association's master policy covered the building structure, but its deductible was large and the repairs to shared systems exceeded what the policy paid.
To cover the shortfall, the association assessed every unit owner several thousand dollars. Owners without loss assessment coverage paid it out of pocket. On top of that, owners whose interior finishes and belongings were damaged needed their own policies to make repairs, and those with actual cash value settlements received far less than replacement cost.
One owner had added replacement cost coverage and a loss assessment endorsement at their last renewal. Their policy paid to restore the interior of their unit and covered the assessment as well. The endorsements had added a small amount to their premium and saved them thousands when the pipe let go.
Not sure where your limits stand?
Send us your current declarations page. We will mark up what we would change and what we would leave alone.
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