Claims process

How an HOA or condo master-policy claim actually works, from the loss to the settlement.

Most boards and managers only learn how their master policy really works when they have to use it. The claims process is not complicated, but the outcome is decided by documents and policy terms that were set long before the loss. This guide walks the process in order, and flags where the money actually gets decided. It is educational, not legal or claims advice, and any specific claim is governed by the actual policy language and the adjuster's determination.

Step 1

Right after the loss: mitigate, document, and preserve

The first duty after a covered loss is to prevent further damage. Most property policies require the insured to take reasonable steps to mitigate, so stop the water, board up the opening, or dry out the affected area, and keep the receipts for that emergency work because it is usually recoverable. Do not authorize full permanent repairs before the adjuster has inspected, aside from what is needed to make the property safe and prevent additional loss.

Document everything: date-stamped photos and video of every damaged area before cleanup, an inventory of what was affected, and the date and cause of loss. Notify the property manager and the board immediately, and preserve the damaged materials where possible, since an adjuster may want to see them.

Step 2

Report the claim promptly, through the manager or broker

Report the claim quickly. Property policies expect prompt notice, and a late report gives the market a reason to question or reduce a claim. The association reports on the master policy, ordinarily through its community manager or its broker, with the declarations page, the date and cause of loss, and the damage documentation in hand. Where individual units are involved, tell affected owners to open their own HO-6 claims in parallel so nothing waits on the master-policy timeline.

Step 3

The adjuster settles by valuation basis and coverage basis

The market assigns an adjuster, and the settlement turns on two policy terms. The first is the valuation basis: a replacement-cost policy pays to rebuild with like kind and quality at current prices, while an actual cash value policy subtracts depreciation, which can pay far less on an older roof or building. The second is the coverage basis set by the declaration, bare-walls, single-entity, or all-in, which decides how far into each unit the master policy reaches and therefore what the association's policy pays versus what falls to the owner's HO-6.

Ordinance-or-law coverage matters here too. When a partial loss triggers a code-required upgrade on an older building, that extra cost is only covered if the master policy carries adequate ordinance-or-law limits. A program written to a bare statutory floor rather than full replacement cost, or with token ordinance-or-law limits, is where a settlement comes up short of the actual cost to rebuild.

Step 4

The deductible and the loss-assessment gap

The association owes the master-policy deductible to the market. Whether it is absorbed from reserves and operating funds or passed to affected owners as a special assessment is a governing-document question, and it is the item boards most often have not settled in advance. On a large catastrophe deductible, written as a percentage of insured value rather than a flat dollar amount, the retained figure can be substantial.

Owners can insure their potential share with loss assessment coverage on the HO-6, but the standard endorsement caps the portion attributable to the master-policy deductible at a low sublimit, commonly around 1,000 dollars, unless it has been specifically endorsed higher. That gap between a large master-policy deductible and a small loss-assessment sublimit is the single most common post-loss surprise for owners.