By the Lapera Insurance Team · Reviewed by Joe Lapera, Licensed Illinois Insurance Agent (IL Lic #100722394)
Condo insurance is the one product where the answer genuinely depends on a document most owners have never read. Your association's declaration decides where its policy stops and yours starts, and Illinois law gives the board the power to hand you a five-figure deductible under circumstances you did not cause. Here is how the two policies fit together, what the statute actually requires, and where the real gap sits.
An Illinois condo owner needs an HO-6 policy covering the interior of the unit, personal property, personal liability, loss of use, and loss assessment. The association's master policy is governed by 765 ILCS 605/12, which requires property coverage on the common elements and the units including the bare walls, floors and ceilings, plus at least $1,000,000 in general liability. The gap between the two is where almost every surprise condo claim lives.
Almost every condo insurance problem we see traces back to the same thing: the owner assumed the association's policy covered more than it does, or assumed their own policy covered something the association is legally allowed to charge them for. Neither assumption is crazy, because nobody hands you a plain-English explanation at closing. This guide gives you that, grounded in the actual Illinois statute rather than general condo advice written for whatever state the author lives in.
What Does an Illinois HO-6 Condo Policy Cover?
TL;DR: Everything from the bare walls inward plus your liability, your belongings, your living expenses and your share of an association loss.
An HO-6 is built to plug into a master policy rather than stand alone. It assumes somebody else is insuring the roof, the structure and the hallway, and it covers what is left, which is more than people expect. In an older Illinois building, the interior finishes are often the most expensive part of the unit.
Building property, Coverage A
Interior walls, flooring, cabinets, countertops, fixtures, built-ins and upgrades. Whatever the master policy does not insure, this does.
Personal property, Coverage C
Furniture, clothing, electronics, everything you would take with you. Choose replacement cost, not actual cash value.
Personal liability
A guest injured in your unit, or water from your unit damaging the one below. Includes legal defense.
Loss of use
Hotel and extra living costs while the unit is uninhabitable after a covered loss.
Loss assessment
Your share of an association loss that exceeds the master policy, or a master policy deductible the board charges back to owners.
Water backup
Sewer and sump backup is excluded from the base form and added by endorsement. Essential in a garden unit or a lower floor.
Coverage A is the line people get wrong most often. If your association uses a bare walls master policy, every interior improvement in the unit is your responsibility, including things you did not install and have never touched. A 1970s Illinois building with original cabinetry and a kitchen renovated by a prior owner can easily need $60,000 or more of Coverage A, and a default HO-6 quote often starts far below that.
Lapera Insurance Agency is a Farmers Insurance agency at 530 Barron Blvd in Grayslake, Illinois. Our team has read a lot of Illinois condo declarations since 2007, with over 40 years of combined experience, and we would rather spend twenty minutes finding out what your association actually insures than guess at a coverage amount. Every guide on this site is reviewed by a licensed Illinois agent before it publishes.
What Does the Association Master Policy Have to Cover in Illinois?
TL;DR: Under 765 ILCS 605/12 it must cover the common elements and the units including bare walls, floors and ceilings, at full replacement cost, plus at least $1,000,000 in liability.
Illinois is more prescriptive than most states here, which works in your favor. Section 12 of the Illinois Condominium Property Act says no policy may be issued or renewed to a condominium association unless it includes specific coverages. The Illinois Department of Financial and Professional Regulation's condominium ombudsperson publishes a plain summary of these requirements as well.
| Required of the association | What the statute says | Why it matters to you |
|---|---|---|
| Property insurance | Required on the common elements and the units, including limited common elements and, except as the board determines otherwise, the bare walls, floors and ceilings | Sets the floor. Anything past the bare walls depends on the declaration |
| Special form causes of loss | Required | Open perils on the building, the broader of the two standard approaches |
| Full replacement cost | Required at purchase and at each renewal, less deductibles | An underinsured building is a statutory problem, not just a bad decision |
| Code upgrade coverage | Required, including demolition costs and increased cost of construction | Older Illinois buildings rarely meet current code. This is what pays the difference |
| General liability | Required, not less than $1,000,000 per occurrence | Injuries in hallways, lobbies, garages and pools |
| Directors and officers liability | Required | Protects the board, and indirectly the owners who fund it |
| Your personal property | Never | That is your HO-6, always |
One more provision worth knowing: insurance proceeds after a loss are held in trust and must be disbursed first to repair the common elements and the bare walls, ceilings and floors of the units, then to any improvements the association insures. Unit owners are not entitled to any of the proceeds unless there is a surplus after the building is fully restored. So the master policy check is not a pot of money that gets divided up. It rebuilds the building first.
What Is the Difference Between Bare Walls and All-In Coverage?
TL;DR: It is the line in your declaration that decides how much building coverage you personally have to buy, and it can swing your HO-6 by tens of thousands of dollars.
The statute sets a floor, then lets the board determine treatment above it. That produces three common arrangements, and your declaration tells you which one you have. Nothing else does, which is why we ask for it before quoting.
| Master policy type | What the association insures | What your HO-6 must cover |
|---|---|---|
| Bare walls | The structure and the unfinished surfaces only | The most Flooring, cabinets, counters, fixtures, interior finishes, all upgrades |
| Single entity | Structure plus the original fixtures and finishes as originally built | Moderate Anything upgraded or added after original construction, plus your property |
| All-in | Structure plus fixtures, finishes and often improvements | The least Personal property, liability, loss of use and loss assessment |
Ask the association or the management company for the declaration page of the master policy and the insurance section of the declaration. The first tells you the master deductible, which drives your loss assessment limit. The second tells you where the association's responsibility stops, which drives your Coverage A. Any competent management company can email both within a day, and no honest quote is possible without them.
How Does Loss Assessment Coverage Work in Illinois?
TL;DR: It pays your share when the association bills owners for a loss its master policy did not fully cover.
An association that suffers a loss larger than its insurance, or a loss its policy excluded, can levy a special assessment on the owners to make up the difference. It can also, in Illinois, pass its deductible to owners under specific circumstances. Loss assessment coverage on your HO-6 responds to your share of that bill, up to whatever limit you selected.
The problem is the limit. Loss assessment is frequently included automatically at $1,000 or $5,000, which was a reasonable default when master deductibles were small. Master policy deductibles on Illinois buildings are now routinely $25,000, $50,000 or higher, and on a wind or water loss the number can be much larger. Raising the limit is usually one of the cheapest changes available on a condo policy.
- Check your current limit first. It is on your declarations page, often buried, and it is usually lower than you think.
- Match it to the master deductible, not to a round number. If the master carries a $50,000 deductible and there are 40 units, your exposure on a full deductible pass-through is different than in a 200-unit building.
- Ask whether the assessment coverage applies to the deductible. Not every form treats a deductible pass-through the same way as a special assessment. This distinction is worth confirming in writing.
- It does not cover routine assessments. A special assessment for a new roof the association simply decided to replace is a capital improvement, not an insured loss. Loss assessment coverage responds to losses, not to deferred maintenance.
- Earthquake and flood assessments are usually limited or excluded, matching the underlying exclusions.
Can the Association Make You Pay Its Deductible?
TL;DR: Yes, in defined circumstances, and this is the single most expensive surprise in Illinois condo ownership.
This is the provision most condo articles skip, and it is written directly into 765 ILCS 605/12. On a claim for damage to a unit or to the common elements, the board of directors may do any of three things with the master policy deductible:
- Pay it as a common expense, spreading it across every owner through the budget.
- Assess it, after notice and an opportunity for a hearing, against the owners who caused the damage or from whose units the loss originated. Note the second half of that: it is not limited to owners who were negligent. A supply line that failed in your unit through no fault of yours can still be where the loss originated.
- Require the unit owners of the affected units to pay it.
The statute also lets the board require owners, through the declaration, bylaws or a rule, to carry insurance covering their personal liability and compensatory damages to another unit caused by their negligence, or arising from their unit regardless of negligence. If your association has adopted that kind of rule, your HO-6 needs to be built to satisfy it, and the default policy usually is not.
A supply hose behind a washer in a fourth-floor unit lets go on a Saturday. Water reaches three units below. Illustrative figures: the master policy pays roughly $90,000 in building damage against a $25,000 deductible, and the board, after notice and a hearing, assesses that deductible to the unit where the loss originated. The owner did nothing wrong, replaced nothing improperly, and owes $25,000. A $5,000 loss assessment limit leaves $20,000 uncovered. A $25,000 limit closes it, and the premium difference is usually a small annual amount. Every figure here is illustrative and is not a quote or a coverage determination.
Braided stainless steel supply lines on the washer, the toilets and the sinks, replaced on a schedule, cost very little and prevent the most common cause of unit-to-unit water loss in Illinois condo buildings. Some carriers also credit an automatic water shutoff device. In a stacked building, your plumbing is everybody's plumbing.
How Much Does Condo Insurance Cost in Illinois?
TL;DR: Less than homeowners insurance on a comparable-value property, because you are not insuring the structure, though the range is wide.
We are not going to publish an average, because condo premiums vary more than almost any other personal line and a single number would mislead you. The reason is structural: two units in the same building, with identical square footage, can carry completely different premiums because one owner has a bare walls master policy requiring $75,000 of Coverage A and the other bought in a building with all-in coverage requiring $15,000.
What moves your number: the Coverage A amount driven by the master policy type, your personal property limit, whether contents are replacement cost, the deductible, the liability limit, your loss assessment limit, the building's age, construction and claim history, the presence of water backup coverage, and your credit-based insurance score, which Illinois permits as a rating factor under the Use of Credit Information in Personal Insurance Act. Bundling with auto is usually the largest single discount.
What Does Condo Insurance Not Cover?
TL;DR: Flood, earthquake, sewer backup without an endorsement, the building itself, and routine special assessments.
| Not covered by a standard HO-6 | Why | The fix |
|---|---|---|
| Flood | Excluded from every standard property policy | Separate NFIP or private flood policy |
| Sewer and sump backup | Excluded from the base form | Water backup endorsement |
| The building structure | That is the association's statutory responsibility | Nothing needed from you |
| Special assessments for improvements | A new roof by choice is maintenance, not a loss | Budget for it |
| Earthquake | Excluded; more relevant downstate than in Lake County | Optional separate coverage |
| Wear, neglect and pests | Maintenance, not a sudden accidental loss | No fix |
Flood deserves a sentence of its own for condo owners, because the assumption that a higher floor means no flood risk is only half right. NFIP sells contents coverage up to $100,000 for a residential unit with the standard 30-day waiting period (FEMA FloodSmart), and the association is responsible for insuring the building against flood, or failing to. If you own a garden unit or a first floor, ask the board directly whether the master policy includes flood.
How Do You Build a Condo Policy That Actually Fits?
TL;DR: Start with the declaration, size Coverage A to the master policy type, then set loss assessment against the master deductible.
- Get the declaration and the master dec page. Everything else is guesswork without them.
- Size Coverage A to what the association does not insure, using the master policy type rather than a percentage rule of thumb. Walk the unit and price the finishes.
- Choose replacement cost on personal property. A few dollars a month, and the difference between being made whole and being handed a depreciated check.
- Set liability at $300,000 or more, and consider a personal umbrella if you own other property or have savings to protect.
- Raise loss assessment to at least the master deductible, after confirming how your form treats a deductible pass-through.
- Add water backup, especially on a lower floor or a garden unit.
- Re-check after any renovation. A new kitchen is a Coverage A increase, and in most declarations it is an improvement the association will never insure.
Renting your unit out instead? That is a different policy entirely, covered in the Illinois landlord insurance guide. If a tenant lives there, they need their own coverage, explained in the Illinois renters insurance guide. For the water questions specifically, the Illinois flood insurance guide covers what flood does and does not mean.
The Bottom Line
Condo insurance is the one personal line where the right answer is written in a document you did not sign and probably have not read. The Illinois Condominium Property Act sets a real floor under what your association must carry, which is good news, and then leaves the most expensive question, where the association's responsibility ends, to a declaration that varies building to building.
Two numbers decide whether your policy works: Coverage A sized to what the master policy actually leaves you, and loss assessment sized to the master deductible. Send us the declaration and the master dec page and we will tell you what those two numbers should be, whether or not you buy anything from us.
Related Questions
What is an HO-6 policy in Illinois?
An HO-6 is a condominium unit owner's policy. It covers the interior of your unit from the bare walls inward, your personal property, your personal liability, loss of use, and loss assessment. It is designed to work alongside the association's master policy rather than to stand alone, which is why the association's declaration determines how much building coverage you need.
What insurance is a condo association required to carry in Illinois?
Under 765 ILCS 605/12, an association's policy must include property insurance on the common elements and the units, including limited common elements and, unless the board determines otherwise, the bare walls, floors and ceilings, written on special form causes of loss at full replacement cost with code upgrade coverage. It must also carry at least $1,000,000 per occurrence in general liability and directors and officers liability.
Can an Illinois condo association charge you the master policy deductible?
Yes, in defined circumstances. Under 765 ILCS 605/12, the board may pay the deductible as a common expense, assess it after notice and a hearing against the owners who caused the damage or from whose units the loss originated, or require the owners of the affected units to pay it. Note that the second option is not limited to owners who were negligent.
How much loss assessment coverage do you need on an Illinois condo?
Enough to cover your realistic share of a master policy deductible or an uninsured association loss. Many policies include only $1,000 or $5,000 by default, while master deductibles on Illinois buildings are often $25,000 or higher. Match the limit to your association's actual master deductible, and confirm in writing that your form treats a deductible pass-through as a covered assessment.
Does a condo master policy cover your personal belongings?
No, never. The master policy insures the building and the common elements. Your furniture, clothing, electronics and anything else you own inside the unit are covered only by your own HO-6 personal property coverage, and only up to the limit you selected, on a replacement cost basis if you chose it.
Do you need flood insurance for a condo in Illinois?
It depends on the floor and on what the association carries. Flood is excluded from every standard HO-6, and the association is responsible for insuring the building against flood or choosing not to. Owners can buy NFIP contents coverage up to $100,000 with a 30-day waiting period. Garden units and first floors are worth asking the board about directly.
Last reviewed September 2026 by Joe Lapera, Licensed Illinois Insurance Agent (IL Lic #100722394). Figures verified against the sources linked above on that date.