Condo insurance in Massachusetts: HO-6 and the master policy.

Two policies cover one condo in Massachusetts

Every Massachusetts condo sits under two policies that have to work together. The association’s master policy covers the common areas you share with others in the building, the roof, basement, elevator, boiler, and walkways, for both liability and physical damage. Your individual policy, the HO-6, covers your personal possessions and your liability, and it likely includes additional living expenses if you’re forced out of the unit. The NAIC’s condominium unit owners form insures your personal property and your walls, floors, and ceiling against the perils in the Broad Form.

The seam between the two policies is where most claims go wrong. If you assume the association insures your kitchen and it doesn’t, you find out at the worst possible time. The controlling documents tell you where the seam sits, and they vary building to building. Before anything else, get your master policy declarations page and your condo documents in hand. This guide works the same way we do when we place an HO-6: read the documents first, then size the policy to the gap.

What Massachusetts law actually requires under c.183A

A common assumption is that state law forces the association to carry a full master hazard policy. It doesn’t say that. M.G.L. c.183A §10(b) lists the organization’s rights and powers, and §10(b)(3) grants the power to obtain insurance on the common areas. That coverage is written in the association’s name, and the statute is explicit that it’s without prejudice to each unit owner’s right to insure his own unit for his own benefit. The law authorizes the master policy; it does not spell out a hazard-insurance mandate with required scope or limits. Sections 8 and 11, which set the required contents of the master deed and the mandatory by-law provisions, contain no insurance requirement at all.

The one insurance mandate in the statute is narrow. Section 10(h) requires condominiums of more than ten units to secure and maintain blanket fidelity insurance against dishonest acts by anyone handling association funds, in an amount equal to at least one-fourth of the annual assessments, excluding special assessments. That protects the money, not the building.

There’s also a liability wrinkle worth knowing. Under §13, all claims involving the common areas are brought against the organization of unit owners. An individual owner is liable only for any balance after common funds are exhausted, and that balance is capped at the owner’s percentage interest in the common areas. So the master policy scope comes from the master deed, the by-laws or declaration of trust, and the master policy itself, not from Chapter 183A.

Bare-walls vs all-in, and why it changes your HO-6

Master policies come in two shapes, and the difference decides how much of your HO-6 you need. Under a bare-walls model, the association insures only the bare walls, floor, and ceiling. Everything inward is yours: kitchen cabinets, built-in appliances, plumbing, wiring, bathroom fixtures. Your HO-6 carries that entire interior build-out layer. Under an all-in model, the association insures the units as originally built, including standard fixtures, and your policy only needs to cover alterations to the original structure, such as a remodel.

The same fire produces two very different HO-6 claims depending on which model your building uses. That’s why sizing your Coverage A by a rule of thumb is a mistake. Read the master deed, the by-laws or declaration of trust, and the master policy declarations to learn which model applies. Fannie Mae points lenders to the same HOA legal documents when judging whether unit coverage is sufficient. If you’re also weighing how the structure and contents split on a standard home, our guide on how home insurance works in Massachusetts explains the coverage parts you’ll see echoed on the HO-6.

How the HO-6 works: interior, contents, liability, loss assessment

The HO-6 is the unit owner’s policy, and it does four jobs. It insures the interior build-out layer you’re responsible for. It insures your personal property. It provides personal liability. And it typically includes additional living expenses so you have somewhere to live during a covered repair.

It also carries loss assessment coverage, which is easy to overlook and important. On the ISO homeowners form, Loss Assessment is a Section I additional coverage that pays up to $1,000 for your share of a loss assessment charged against you by the association, where the assessment results from direct loss to collectively owned property by a covered peril, earthquake excepted. That $1,000 is the most paid for any one loss regardless of how many assessments are levied, and only one deductible per unit applies to the total. Section II of the form adds up to $1,000 for assessments arising from bodily injury or property damage liability, or from an act of an association director, officer, or trustee serving without compensation. The practical translation: if a fire in the lobby gets repaired and the cost is charged to all unit owners, this coverage reimburses your share up to the limit. Many owners raise the base limit, and we’ll tell you when that’s worth doing.

Loss assessment and the c.183A §17 rebuild math

Assessments after a large loss aren’t hypothetical, and §17 lays out the math that makes coverage matter. A casualty loss of 10 percent or less of the condominium’s value is repaired as a matter of course, paid from common funds and insurance proceeds. Above that threshold, timing and votes take over. If the loss exceeds 10 percent of value and 75 percent of unit owners do not agree within 120 days after the casualty to proceed with repair, the condominium becomes subject to partition, ending the arrangement.

If 75 percent do agree to rebuild, restoration costs above insurance proceeds and available common funds become common expenses. When that excess itself exceeds 10 percent of the pre-casualty value, a dissenting owner can petition the superior court to compel the organization to buy the unit at fair market value, with that purchase cost also a common expense. Every one of those steps presumes insurance proceeds exist and are adequate. Thin master coverage means bigger assessments, and bigger assessments are exactly what your loss assessment limit is meant to blunt.

What your lender requires on a condo mortgage

Lenders don’t rely on the statute either. Under the Fannie Mae Selling Guide, the master property policy must provide coverage of at least 100 percent of the replacement cost value of the project improvements, including common elements and residential structures, written on a replacement-cost basis rather than actual cash value. The maximum allowable per-occurrence master-policy deductible is 5 percent of the master coverage amount, and where multiple deductibles apply to one occurrence, their combined total still can’t exceed that 5 percent. Master policies need a Condominium Association Coverage Form endorsement with a waiver of subrogation against unit owners, and projects with central heating or cooling need boiler and machinery coverage of the lesser of $2,000,000 or building replacement cost.

Your HO-6 fills a specific slot here. An individual unit policy is required when the master policy does not cover the interior or improvements of a unit, and the lender or servicer must verify the coverage amount is sufficient to restore the unit to its pre-loss condition. Fannie Mae recommends borrowers collaborate closely with an insurance professional to determine their needs. That’s the work we do when we shop your HO-6, matching the interior amount to the gap your master policy leaves.

If no carrier will write you: the FAIR Plan HO-6

When the voluntary market won’t write your unit, the residual market can. The Massachusetts Property Insurance Underwriting Association, the FAIR Plan, provides basic property insurance for applicants who couldn’t get coverage otherwise, and its homeowners program includes the Condo Unit Owners Form HO 00 06. On that form, base Coverage A for the unit interior is $5,000 and can be increased. Coverage C personal property runs from a $10,000 minimum up to a $1,000,000 maximum at an insured location, and Coverage D loss of use is 50 percent of Coverage C. Personal liability under Coverage E runs from $100,000 to $500,000, with medical payments from $1,000 to $5,000. It’s a floor, not a ceiling, and it exists so an eligible unit isn’t left uninsured. Our FAIR Plan guide covers eligibility and how the residual market fits with voluntary coverage.