Master Policy vs. Your Unit Policy: Who Covers What

# Master Policy vs. Your Unit Policy: Who Covers What

One of the most common surprises for first-time condo buyers in Massachusetts is discovering that their condo association's insurance doesn't cover everything inside their unit. There are two separate policies at work: the association's master policy and your personal H-06 policy. Understanding where one stops and the other begins can save you thousands of dollars after a burst pipe, a kitchen fire, or a break-in.

What the Master Policy Covers

Every condo association carries a master insurance policy, funded through your monthly condo fees. It protects the building structure and the common areas—things like the roof, exterior walls, hallways, lobbies, elevators, stairwells, and shared systems such as central heating or the building's plumbing mains.

The master policy also carries general liability coverage for accidents that happen in common areas, like a slip-and-fall on an icy walkway (a real concern during New England winters).

Where it gets tricky is how much of the *inside* of your unit the master policy covers. Massachusetts associations typically use one of two approaches, spelled out in the master deed and bylaws:

• "All-in" (or "single entity") coverage: The master policy covers fixtures, built-in appliances, cabinetry, flooring, and original finishes throughout the unit—essentially everything as it existed when the building was constructed.
• "Bare walls" coverage: The master policy covers only the structure up to the unfinished walls, floors, and ceilings. Everything inside—drywall, flooring, cabinets, fixtures—is your responsibility.

You cannot assume which type you have. You have to read the documents. This is exactly the kind of detail I help clients verify before they commit to a purchase.

What Your H-06 Policy Covers

An H-06 policy, sometimes called condo unit-owner's insurance, fills the gaps the master policy leaves. Depending on your association's coverage type, your H-06 typically handles:

• Interior improvements and betterments: Upgrades you or a previous owner made—renovated kitchens, hardwood floors, updated bathrooms—especially under a bare-walls master policy.
• Personal property: Your furniture, electronics, clothing, and belongings. The master policy never covers these.
• Personal liability: If someone is injured inside your unit, or if you accidentally cause damage to a neighbor's unit.
• Loss assessment coverage: This is critical and often overlooked. If the association suffers a large loss that exceeds the master policy limits, it can levy a special assessment on all owners. Loss assessment coverage on your H-06 helps pay your share.
• Loss of use: If your unit becomes uninhabitable, this covers temporary living expenses.

The Master Policy Deductible Trap

Here's a scenario I see catch owners off guard. Suppose a pipe bursts in your unit and damages your floors and your downstairs neighbor's ceiling. The master policy might cover the repairs—but the master policy deductible can be $10,000, $25,000, or more.

Many Massachusetts master deeds allow the association to pass that deductible along to the unit owner responsible for the loss. That means you could be on the hook for the full deductible amount. A well-structured H-06 policy can cover this, but only if you've matched your coverage to your association's actual deductible. Read the master policy declarations page and set your loss assessment and deductible coverage accordingly.

How to Figure Out Your Real Coverage

Before buying—or annually as an owner—gather these three documents:

1. The master deed and bylaws, which define whether coverage is all-in or bare walls.

2. The master policy declarations page, showing coverage limits and the deductible.

3. A certificate of insurance from the association's agent.

Then sit down with your own insurance agent to size your H-06 policy to the gaps. If you're buying, your lender will require proof of both the master policy and often an H-06 policy at closing.

As a Massachusetts real estate professional, I walk buyers and sellers at Signal Real Estate through these documents during due diligence so there are no expensive surprises after closing.

The Bottom Line

The master policy protects the building; your H-06 protects you. The dividing line depends entirely on your association's documents, so never assume. Read the master deed, check the deductible, and match your H-06 policy to the actual gaps. If you want help interpreting these documents before you buy or sell in Massachusetts, reach out—that's exactly what I do.