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Understanding the insurance coverage that your HOA maintains — and the significant gaps that coverage leaves for individual homeowners — is essential financial risk management for anyone living in an HOA community. The boundary between what the association’s master policy covers and what your individual unit owner’s policy must cover is one of the most commonly misunderstood aspects of HOA living.
What the HOA Master Policy Covers
California HOAs are required by Davis-Stirling to maintain certain minimum insurance coverage, typically including: commercial general liability coverage for the common areas; property insurance covering the common area structures; and directors and officers (D&O) liability insurance covering board members for their governance decisions. The specific coverage terms — what property is covered, at what value, with what deductibles — vary by association and are specified in the master policy.
The “Walls In” vs. “All In” Coverage Question
The most important coverage question for individual homeowners is whether the HOA’s master property policy is “walls in” or “all in.” A “walls in” (also called “bare walls”) policy covers only the structure from the bare walls outward — meaning your individual fixtures, flooring, cabinets, appliances, and improvements are not covered by the master policy. An “all in” policy covers everything to the interior finished surfaces, including fixtures and appliances but typically not personal property. Most California condo associations carry walls-in coverage, which means individual owners need unit owner’s insurance covering their improvements and personal property.
The Deductible Gap Problem
Even when the HOA’s master policy would cover a loss, the association’s deductible — which can range from $10,000 to $50,000 or more — may be assessed against the individual unit owner whose unit was involved in the loss-causing event. This “deductible assessment” provision in HOA governing documents means that a fire starting in your unit could result in a significant assessment against you to cover the HOA’s deductible — even if the fire was accidental and the master policy ultimately pays the claim. Your individual unit owner’s policy should include coverage specifically for HOA deductible assessments.
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