You can own a condo in California, never file a claim, and still get a letter from the association. In the opening of Speaking of Insurance episode 39, a storm damages the roof, the master policy has a $50,000 deductible, and the board splits that cost across the owners. The chapter calls the letter a $4,000 letter. Whether you pay your share out of pocket can come down to one line on your condo policy: loss assessment. Aaron Bollinger of Bollinsure Insurance Services walks that split.

This page follows that episode. The issued policy controls, and so do the association's governing documents. A story about someone else's roof is not a coverage opinion on your unit.

Two policies, one building

A California condo is two policies, not one. The association's master policy covers the building the way the governing documents assign that job. Your HO-6 covers what the master leaves to you. The episode's point is that those two policies have to be read together. An HO-6 written as if it were a house policy does not know where the master stops.

CC&Rs and the Davis-Stirling Act

The answer to who maintains what, and who insures what, lives in the CC&Rs and the Davis-Stirling Act. Around 3:00, the clarification is that CC&Rs are the rules that govern a common interest development, such as a condo or planned community, run by its homeowners association. This page does not reprint those documents. The CC&Rs for your association, and the master policy declarations that go with them, are the reading that sets the line.

Bare walls, single entity, and all-in

The episode names three ways a master policy can be written:

  • Bare walls. The master stops at the walls. The interior finishes are yours.
  • Single entity. The master covers the unit as originally built. Your upgrades are yours.
  • All-in. The master covers the unit interior, including betterments.

Which of the three you have is printed in the master policy and the CC&Rs. The name on a sales brochure is not the form.

Size Coverage A to the interior you would rebuild

Coverage A on the HO-6 is the interior the master does not cover. The episode's instruction is to size that limit to the cost to gut and rebuild the interior, not to a guess left over from the purchase. Quartz, hardwood, cabinets, and the other upgrades you paid for belong on that limit when the master is a single entity form and those finishes are yours. A low Coverage A makes every percentage and every sublimit smaller than it sounds.

Walking the HO 00 06

The words "HO-6" and "HO0006" in the episode refer to the ISO unit owners form HO 00 06. Carriers use their own versions. The episode walks these coverages on that form:

  • Coverage A. The dwelling interior the master leaves to you.
  • Coverage C. Personal property. The episode says this is often named perils, and that an open perils endorsement is available.
  • Coverage D. Loss of use, which is the hotel in the example below.
  • Coverage E. Liability.
  • Coverage F. Medical payments.

Named perils means the list on the form. Open perils is the endorsement that changes that list. Ask which one is on the declarations page.

Exclusions to know

The episode names exclusions that stay exclusions on the HO-6:

  • Earth movement. Earthquake is not a covered cause on the unit owners form.
  • Flood.
  • Wear and tear.
  • Continuous or repeated leakage.

That list is what the episode covers. It is not every exclusion on every carrier form.

Loss assessment

Loss assessment is the coverage that can pay your share when the association bills owners. The episode names three triggers:

  • The master deductible. The association assesses owners for the deductible on a covered loss.
  • A loss over the master limit. The damage is more than the master policy pays, and the shortfall is assessed.
  • Liability over the master limit. A liability loss exceeds the master's liability limit, and the association assesses the difference.

The built-in loss assessment on the form is typically about $1,000. That amount is the episode's description of the built-in limit. It is not a promise that every HO-6 includes it, and it is not enough for a master deductible in the tens of thousands.

Around 9:05, the words spoken as "HOO435" are the ISO loss assessment endorsement HO 04 35. The episode says the limits commonly offered are $25,000 to $50,000. Bollinsure suggests about $50,000. Pricing varies by carrier and limit, and the clarification is that the endorsement is often inexpensive relative to the exposure. Ask for a quote with it and without it.

Three details in the endorsement

The episode is as clear about the boundaries as it is about the limit:

  • A covered cause. The assessment has to come from a cause the unit policy covers. An excluded peril stays excluded.
  • A deductible assessment can be capped. The endorsement can limit how much of a master deductible it will pay. The cap is on the endorsement, not assumed from the name.
  • Earthquake is excluded. Ordinary loss assessment on the HO-6 does not turn an earthquake assessment into a covered assessment.

Earthquake assessments are a separate policy

The California Earthquake Authority is publicly managed, privately funded, and not-for-profit. Its policies are sold through participating insurance companies. A CEA condo unit policy can include building property, personal property, loss of use, and loss assessment for earthquake. That is a different contract from HO 04 35. Speaking of Insurance episode 37 is the conversation about how a California earthquake policy pays. This page does not restate it.

California traps the episode names

The recording names three traps that show up after the form is written:

  • The annual association insurance summary. Read it. It is the association's own account of the master policy, and it is the document that should match the CC&Rs.
  • The wildfire market. The episode names the FAIR Plan and higher deductibles as the market a condo owner can be standing in. The California FAIR Plan page is the longer reading. This guide does not repeat those figures.
  • Renting the unit out. A unit you rent needs a rental endorsement or a rented-condo policy. The owner-occupied HO-6 is the wrong form for that use.

A water loss in Thousand Oaks

The episode walks one loss, a water loss in a Thousand Oaks condo. The master policy is single entity. The quartz and hardwood upgrades sit on Coverage A, because the master covers the original interior and those upgrades are the owner's. The master deductible is $25,000. The owner's share of that deductible is $8,000.

An HO 04 35 limit of $50,000, with a $10,000 cap on deductible assessments, pays that $8,000 share in the example. Coverage D pays for the hotel. With only the built-in loss assessment, about $1,000, the owner pays the rest of the $8,000 share. Those figures are the example. They are not a quote, and they are not the limit on a policy this page has not read.

Five items to gather

The episode closes with five items to gather before you talk to a broker. Use the recording for the list itself. The documents the episode keeps returning to are the ones to have in hand: the CC&Rs, the master policy, your HO-6, the association's annual insurance summary, and a list of the interior upgrades you paid for.

See home insurance in California, or request a condo coverage review. You can also call 562-268-9355.

This guide is general educational information. It is not legal, tax, or coverage advice. Coverage, eligibility, and pricing depend on the carrier, underwriting, your policy terms, and your association's governing documents. CA License 6013787.

Sources and Further Reading