What does an HOA master insurance policy cover? The association's insurance on the common elements and, in a condominium, on the building itself, which decides what a unit owner's own policy still has to cover.
A master insurance policy is the property and liability insurance an association carries on what it is responsible for: the common elements, and in a condominium the structure of the building. In Nevada it is not discretionary. NRS 116.3113 requires the association of a condominium to maintain, to the extent reasonably available, property insurance on the common elements and the units, and commercial general liability insurance against claims arising out of the common elements. Boards commonly buy directors-and-officers coverage beside it, which defends the board rather than the building, and a fidelity bond against a manager taking the money.
How far into a unit the policy reaches is set by the declaration, and two answers are in common use. Bare walls covers the structure and the common elements and stops at the unimproved surfaces of the unit. All-in, also called single entity, additionally covers the fixtures and finishes as originally built, so the owner is left with later improvements and contents. The other figure to find is the deductible, which on a building policy is often tens of thousands of dollars, and which under many declarations is charged back to the owner of the unit the loss started in or spread across every owner as an assessment.
Whatever the master policy does not reach is exactly what the unit owner's HO-6 has to. A lender asks for the association's certificate of insurance before closing, and it repays reading rather than filing: it names the coverage form, the replacement cost carried on the building, the deductible, and whether there is directors-and-officers and fidelity coverage. Here the certificate and the insurance summary both arrive in the resale package under NRS 116.4109, which lands while the buyer's five-day cancellation window is still open.
A worked example
A supply line bursts on the top floor of a 24-unit building insured for $2,000,000 with a $25,000 deductible. The repair comes to $180,000. The master policy pays $155,000 and the association owes the $25,000 deductible, which its declaration spreads across the units at about $1,040 each. Loss assessment coverage on each owner's HO-6 is what pays that $1,040, and the finishes the owners installed themselves are on their own policies.
Questions people ask
Does the HOA master policy cover the inside of my unit?
It depends on the declaration. An all-in or single-entity policy covers the fixtures and finishes as originally built. A bare walls policy stops at the structure, so the drywall in is the owner's, and everything inside it belongs on the owner's HO-6.
Who pays the master policy deductible?
The association pays it to the insurer, then recovers it the way its declaration allows: charged to the owner whose unit had the loss, or assessed across all the owners. Loss assessment coverage on an HO-6 exists to pay the owner's share of exactly that.