Condo Association Insurance: What Boards Should Review Before Renewal

Condo association insurance: master policy vs. unit owner coverage

A condo association's master policy insures the structure and the common elements. The Maryland Insurance Administration describes it as coverage for "the structures and common areas against risks of direct physical loss." Each owner's policy, usually called an HO-6, covers what the master policy leaves out.

The master policy gets most of the attention at renewal, but it isn't the only policy reviewed. Fannie Mae requires general liability coverage of at least $1 million per occurrence for the common elements, and fidelity or crime coverage against theft of association funds in condo projects with more than 20 units. The review should also include directors and officers (D&O) coverage, which protects board members for decisions made in their board role, and any umbrella policy. In addition, a standard property policy typically doesn't cover flood, so flood needs its own policy. Each of these can change terms at renewal.

For the master policy, the biggest question is where its coverage ends, and the owner's begins. The insurer doesn't draw that line. Your declaration and your state's condo statute do. The Washington State Office of the Insurance Commissioner lays out the three common arrangements:

1. All-in: the master policy covers the exterior and the interior finishes, including cabinets, fixtures, and floor coverings.
2. All-in, excluding improvements: the master policy restores units to their original finishes, and owners insure any upgrades they've made since.
3. Bare walls: the master policy stops at the uncovered drywall and subfloor, and owners insure the interior finishes.

Some states write the boundary into law. Florida's condo statute, section 718.111, requires the association to insure the condominium property as originally installed but excludes items inside units such as floor, wall, and ceiling coverings, appliances, water heaters, built-in cabinets, and countertops. Those belong on the owner's policy.

Mortgage rules assume the same split. Fannie Mae's unit insurance requirements require the owner to carry an individual unit policy whenever the master policy doesn't cover the unit interior or carries a per-unit deductible.

Before renewal, put the insurance article from your declaration next to the policy's coverage form. If they describe different boundaries, fix it now, not after a pipe bursts. Then tell owners in writing which side of the line they're on so they can buy the right HO-6 coverage.

What drives condo insurance premium increases

Knowing what the master policy covers tells you what you're buying. The next question is why it costs more than it did last year. Four things drive the price, and only one of them responds to anything the board does.

The first driver is the cost to rebuild. A master policy is supposed to insure the community at replacement cost, which is what it would take to rebuild today, not what the units would sell for. That number follows construction prices, and the Bureau of Labor Statistics producer price index for goods used in residential construction rose 7.8% from August 2025 to August 2026. When the valuation keeps pace, the insured value and the premium rise together. When it doesn't, the community is underinsured. Lenders and some states set a floor: Fannie Mae requires master coverage equal to at least 100% of estimated replacement cost, and Florida requires replacement cost to be determined, through an independent appraisal or an update of one, at least once every three years.

The second is catastrophe losses. Insurers, and the reinsurers that insure them, price in what disasters cost. Swiss Re Institute puts 2025 insured natural catastrophe losses at $107 billion worldwide, the sixth straight year above $100 billion, with the U.S. accounting for 83%. Severe convective storms (thunderstorms that bring hail, tornadoes, and damaging winds) topped $50 billion for the third year in a row, which is why wind and hail pricing isn't only a coastal problem.

The third driver is the community's own risk profile, and it's the one the board controls. Writing this June after attending CAI's annual conference, property insurance attorney Chip Merlin outlines the kind of property story that can strengthen an association’s case with underwriters: "current reserve studies, credible maintenance records, documented repairs, recent inspections, permit histories, roof reports, plumbing updates, electrical upgrades, fire system testing, and a plan for capital improvements."

The fourth driver is the market cycle, and right now it's moving in the right direction. Commercial property pricing is easing. Marsh's Global Insurance Market Index showed U.S. property rates down 13% in the second quarter of 2026, helped by lower reinsurance costs. Marsh tracks commercial accounts broadly, not condo associations specifically, so read that as a direction rather than a promise. A softer market helps most when carriers have a reason to compete for your account, and a complete file (covered below) gives them one.

Deductibles: the number that turns into an assessment

A lower premium doesn't mean much if the deductible climbed to get there. The deductible is what the association pays on a covered claim before insurance pays anything, and it can change at renewal. In the same FCAR survey, 29% of respondents said the insurer forced high deductibles or per-unit deductibles on them at their last renewal.

Master policies usually carry some mix of three types:

• A flat deductible per occurrence, such as $25,000 per claim.

• A percentage deductible for specific perils like wind, hail, or named storms. The NAIC explains that a named storm deductible is usually a percentage of the property's value, not of the loss.

• A per-unit deductible, applied to each unit involved in a claim.

Percentage deductibles deserve the closest look because they scale with the building's insured value, not the damage. Take a building insured for $40 million with a 5% named storm deductible. The association owes the first $2 million of any covered hurricane loss. Spread across 100 units, that's $20,000 per unit, which becomes a special assessment unless reserves or a dedicated deductible fund can absorb it.

Lenders set limits here too. Fannie Mae limits the master policy deductible to 5% of the coverage amount, and any per-unit deductible to $50,000. A deductible above either limit can make units ineligible for loans Fannie Mae buys, which can make it harder for buyers to finance a purchase in the community.

Who ultimately pays depends on your governing documents and state law. Maryland lets the association assess up to $10,000 of the master deductible to the owner of the unit where a loss started, and treats the deductible as a common expense when the loss starts in the common elements. Florida has the board set deductibles at a noticed board meeting, based on available funds and the association's assessment authority.

So before accepting a higher deductible to lower the premium, confirm the association could fund it. Then give owners the dollar figure. An HO-6 policy can include loss assessment coverage, which the Washington insurance commissioner says "may help you pay for special assessments the association charges its members for losses the community sustained." Owners can't buy enough of it without knowing the number.

The documentation trail insurers and brokers ask for

Of the four premium drivers, the community's risk profile is the one records can move. When your broker takes the community to market, the underwriter decides how much uncertainty to price in, and records reduce it. Merlin put it this way: the most important question for boards is no longer "What did our loss runs show?" but "What story does our property tell an underwriter?"

Lenders ask many of the same questions. Fannie Mae's condo project questionnaire asks when a licensed architect or engineer last inspected the building and whether that inspection found safety or structural issues. Its project standards FAQ tells lenders to review "a complete and true copy of any structural or mechanical inspection report (not just mandatory inspections) that has been completed within the past three years."

Build the renewal file before the broker asks for it. Here's what belongs in it and what each item shows:

Many of these records already exist. The problem is where they end up. If the incident report behind a claim, or the proof that an inspection finding was closed, sits in a former manager's inbox, it doesn't exist at renewal. The same records support the year-round habits outlined in our post on 7 ways condo boards can limit exposure, making this valuable work beyond insurance for renewal.

How BuildingLink keeps the renewal file current

Staff and managers create much of the renewal file during the year, just by doing their normal work. BuildingLink captures it as it happens, so no one has to rebuild it from inboxes every fall.

The document library can hold policies, appraisals, the reserve study, and inspection reports in categories, with an optional document date and expiration date on each. Management chooses who can view each document, and if no audience is selected, only Management and Security Officer users can see it. When the board sends owners a notice about what the master policy covers, save and notify posts the document and alerts residents in one step.

When something goes wrong, incident reports let staff log it by type and attach photos and documents. By default, a manager or security officer approves each report before it's final. Any report can be generated as a PDF for the claim file.

Inspections and maintenance connect the finding to the fix. Inspections run from custom checklists on a schedule, and every checklist item has a notes field, a photo, and the option to open a maintenance request on the spot. Completed inspections download as PDFs. The equipment directory tracks purchase and installation dates, costs, and warranty information for equipment like boilers and elevators, so those dates are on file when the underwriter asks how old the systems are.

For contractors, the vendor directory tracks certificates of insurance and licenses, marks each vendor compliant, expiring, or expired, and can email alerts before documents expire. Vendors with documents expiring in the next 30 days also appear in the action items list on the manager dashboard.

Start the review before the budget vote

The insurance quote isn't the only thing squeezing next year's budget. Fannie Mae is adding pressure from the reserve side. For loan applications dated on or after January 4, 2027 that go through its Full Review process, it raises the minimum reserve allocation from 10% to 15% of annual budgeted assessment income, so the 2027 budget has less room to absorb an insurance surprise. That makes the weeks before the quote is final the time to push back.

Start with six questions for your broker:

1. What replacement cost value is this quote based on, and when was it last updated?

2. Which deductibles changed, and what is each percentage deductible in dollars?

3. Does the policy's coverage form match the insurance article in our declaration?

4. What did the underwriter flag about our property, and what would change the rate?

5. How many carriers did you approach, and why did any decline?

6. Is any coverage placed with a surplus lines carrier (an insurer not licensed in our state that takes risks licensed carriers won't) or a state FAIR plan (a state-mandated insurer of last resort)?

Then hand your broker the renewal file before they go to market, not after the first quote comes back. If your community's records live in five different places today, connect with a member of our team to see how BuildingLink keeps them in one.