Property Insurance for Your Association: What the Master Policy Covers and How It Is Valued

Part of the Insurance Warehouse Coverage Explained series: what each piece of an association’s insurance program does, in plain English.

The property section of an association’s master policy is the largest limit on the declarations page and the one most boards understand least. It pays to rebuild the buildings and common areas after a fire, a storm, a burst pipe or a vehicle through a garage door. Whether it pays for the inside of a unit depends on words in your own documents, not the carrier’s.

What the master policy insures

• The buildings. Roofs, siding, framing, foundations and the shared systems inside the walls.
• Common areas. Clubhouses, pools, fences, mailboxes, retaining walls, signs and lighting.
• Association contents. Furniture, equipment and supplies the association owns.
• Loss of income and extra expense. Assessments the association cannot collect while units are unlivable, and the cost of operating from somewhere else.

Bare Walls, Original Specs or All-In: your documents decide

The master policy follows the coverage form written into your declaration or a board resolution. Bare Walls stops at the studs, so unit owners insure everything inside. Original Specifications covers the unit as it was first built, and owners insure their upgrades. All-In covers finishes and improvements too. Each form changes what the association pays after a loss and what every owner needs on their HO-6 policy.

How the value is set

• Replacement cost is what it costs to rebuild today, not the market value of the units. Construction costs in Minnesota have moved a long way since 2021, so values need a fresh look every few years.
• Blanket replacement cost puts one total limit across all buildings, so a single damaged building can draw on the whole limit. Standard replacement cost assigns a limit per building.
• Coinsurance is a penalty for under-insuring, usually at 80 or 90 percent of replacement cost. An agreed amount endorsement waives it.

The deductibles that surprise boards

• Per building deductibles apply to every damaged building in one storm. Per occurrence applies once to the whole event.
• A 5 percent wind and hail deductible on a building insured for $1,000,000 is $50,000, per building. Boards without reserves for that end up special-assessing owners, which is why we recommend every owner carry loss assessment coverage on their HO-6.
• Higher deductibles lower the premium and keep small claims off the association’s record. We rarely recommend the lowest deductible available.

Before your next renewal, check that

Tap or click a box to tick it off as you walk. The boxes reset when the page is reloaded, so print the PDF at the end if you want a record.

• The coverage form on the policy matches the declaration or the newest board resolution.
• Building values were reviewed in the last three years, ideally with an appraisal.
• The policy is blanket or carries an agreed amount endorsement.
• The board knows the wind and hail deductible in dollars, not just as a percentage.
• Owners have been told what to carry on their HO-6 policies.

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