The Condo Insurance Gap Most Unit Owners Don’t Know About

If you own a condo in Illinois, you’re covered by two insurance policies: your association’s master policy and your personal HO-6 unit owner policy. The problem is that most unit owners have no idea where one policy ends and the other begins, and that gap is exactly where expensive surprises live.

What the Association’s Master Policy Covers

Your condo association carries a master insurance policy that covers the building’s common elements. There are two main types:

“Bare Walls” Coverage (Most Common in Illinois)

This is the most common type in our area. The master policy covers:

The building’s exterior structure (roof, walls, foundation)
Common areas (lobbies, hallways, elevators, parking garages)
Building systems up to the unfinished interior surfaces of your unit

It does not cover anything inside your unit’s walls, no flooring, cabinets, countertops, fixtures, appliances, paint, or wallpaper. That’s all on you.

“All-In” or “Single Entity” Coverage

Less common but more comprehensive. This covers the building plus the original fixtures, installations, and improvements within individual units as originally built. If you’ve made upgrades or renovations beyond the original build, those improvements are still your responsibility.

What Your HO-6 Policy Needs to Cover

Your unit owner policy (HO-6) fills in everything the master policy doesn’t:

Dwelling Coverage (Coverage A)

This covers the interior of your unit: walls, floors, ceilings, cabinets, countertops, built-in appliances, fixtures, and any improvements or upgrades you’ve made. With a bare walls master policy, this is critical, you’re essentially insuring everything from the drywall in.

The dwelling coverage amount should reflect the cost to rebuild your unit’s interior from scratch. For a renovated condo with custom finishes, this can easily be $100,000-300,000+.

Personal Property (Coverage C)

Your furniture, clothing, electronics, and other belongings. Standard HO-6 policies provide replacement cost coverage, meaning you receive what it costs to buy a new equivalent item, not the depreciated value.

Loss Assessment Coverage

If the association’s master policy doesn’t fully cover a building-wide claim (fire, storm damage, major liability event), the shortfall is assessed to unit owners. Loss assessment coverage on your HO-6 pays your share of these assessments.

Standard loss assessment coverage is often $1,000-2,000, nowhere near enough for a major building claim. Increasing this to $25,000-50,000 is inexpensive and strongly recommended.

Personal Liability

If someone is injured inside your unit, your HO-6 liability coverage responds. This also covers damage you accidentally cause to other units, for example, if your washing machine overflows and damages the unit below.

Additional Living Expenses

If your unit becomes uninhabitable due to a covered loss, this pays for temporary housing and increased living expenses.

The Most Common Condo Insurance Mistakes

1. Assuming the Master Policy Covers Your Interior

Under a bare walls policy, if a fire destroys your unit, the master policy rebuilds the shell. You’re responsible for everything inside, and without adequate dwelling coverage on your HO-6, that comes out of pocket.

2. Underinsuring Dwelling Coverage

Many unit owners carry $20,000-50,000 in dwelling coverage when they actually need $150,000+. Think about what it would cost to install new flooring, cabinets, countertops, bathrooms, fixtures, and appliances throughout your entire unit.

3. Skipping Loss Assessment Coverage

One major building claim with an underinsured association can result in five- or six-figure special assessments to each unit owner.

4. Not Reading the Master Policy

Request a copy of your association’s master policy (or at least the declarations page). You need to know whether it’s bare walls or all-in to properly structure your HO-6.

How to Get Your Condo Insurance Right

Get a copy of your association’s master policy declarations page
Determine whether it’s bare walls or all-in coverage
Calculate the cost to rebuild your unit’s interior from scratch
Set your HO-6 dwelling coverage to match that rebuild cost
Increase loss assessment coverage to at least $25,000
Add sewer backup endorsement if your building has basement units
Review annually, especially after renovations

Get a Free Condo Insurance Review

Longmeadow Insurance is an independent agency in Wilmette. We’ll review your association’s master policy alongside your HO-6 to make sure there are no gaps. Request a free review or call (847) 242-1040.

Coverage We Write

Longmeadow Insurance is an independent agency in Wilmette with offices across Chicago and the suburbs. If any of this applies to your situation, we can review your current policy and tell you what it actually covers.

Call 847.242.1040 or request a quote online.

Condo Master Policy vs. HO-6: What Your Association Covers and What You Need