Condo Insurance Made Simple: What Every Hawai'i Owner Should Know

A Honolulu condo owner spent $15,000 renovating her kitchen. When a pipe burst in the unit above and destroyed everything, she assumed her AOAO's insurance would cover it. It didn't. The master policy only covered the building structure, and she had never purchased personal condo insurance.

Understanding how condo insurance works can prevent scenarios like this.

The Two-Policy Reality

Standard homeowners insurance doesn't work for condos. You need what the insurance industry calls an HO-6 policy, also known as unit-owners coverage, condo insurance or walls-in coverage.

Your AOAO's master policy typically covers the building structure and common areas like hallways, elevators, pools, and parking garages. Your personal HO-6 policy typically covers everything inside your unit and your personal liability [1].

This split creates confusion about who pays when damage occurs. Water damage from building pipes might fall under the master policy. Water damage from your dishwasher probably falls under your HO-6 policy. Understanding this boundary helps you avoid expensive surprises.

Understanding Your AOAO’s Master Policy

Your association's master policy comes in two types, and the difference affects how much personal coverage you need

Your HO-6 policy should match your building's master policy type. If your building has bare walls-in coverage, you need higher coverage limits because you're protecting more. If your building has all-in coverage, you still need protection for upgrades and improvements beyond original installations.

Request a copy of your association's master policy and Certificate of Insurance. Your property manager or AOAO board should provide these documents. Read them or ask your insurance agent to review them with you. Don't assume you know what the master policy covers.

What Your HO-6 Policy Should Cover

Five Types of Coverage You Need

• Personal Property Coverage: This typically protects your belongings like furniture, electronics, and clothing. Coverage limits vary based on your needs [1].
• Interior Improvements and Upgrades: This covers upgrades you've made beyond the building's original condition: new flooring, custom cabinets, bathroom fixtures, paint, and upgraded lighting [1]. Calculate what it would actually cost to rebuild your improvements at today's Hawaii prices.
• Personal Liability Coverage: This typically protects you if someone gets injured in your unit, you damage another unit or face other liability claims. Discuss appropriate limits with your insurance agent [1].
• Loss Assessment Coverage: This pays your share if the AOAO charges a special fee after a disaster the master policy doesn't fully cover [1]. For example, if hurricane damage causes $5 million in repairs but the master policy only covers $4 million, the AOAO may divide that $1 million gap among unit owners. Loss assessment coverage may apply if the AOAO board assesses the deductible amount under the AOAO master policy if a covered cause of loss originated from or affected your unit [8]. Standard policies typically include loss assessment protection, with limits that can range from $1,000 to $50,000 or more. Some insurers offer higher limits. Hawaii condo owners should consider higher coverage given the costs of building repairs.
• Additional Living Expenses: If your unit becomes uninhabitable after a covered loss, this pays for hotel rooms or other living arrangements including food costs while repairs are completed. Coverage duration and type vary depending on your policy [1].

Coverage Gaps Condo Owners Should Consider

Standard HO-6 policies exclude several types of damage that affect Hawai'i properties.

• Flood Damage: Standard condo insurance doesn't cover flooding from any source: heavy rain, storm surge, tsunami, or rising water. You need separate flood insurance through the National Flood Insurance Program (NFIP) or private insurers [3].* Flood insurance through the NFIP has a 30-day waiting period before it takes effect.

*See footnote regarding upcoming FEMA flood map changes for Oahu.

• Hurricane Damage: Some HO-6 policies include hurricane coverage but with a separate, higher deductible. Deductibles might be $500 or $1,000 for non-hurricane property losses while hurricane coverage deductibles can range from 2% to 5% or more of your coverage amount [5]. For a policy with $300,000 in coverage and a 2% hurricane deductible, you pay the first $6,000 of hurricane damage out of pocket. Some policies do not cover hurricane damage at all, requiring purchase of a separate hurricane insurance policy.
• Earthquake Damage: Standard HO-6 policies in Hawai'i typically do not cover earthquake damage, which requires separate coverage. Deductibles can range from 10% to 25% or more of the coverage amount [6].

Coverage Limit Problems

Coverage gaps don't just come from missing policies. Sometimes you have the right type of coverage but not enough of it. When your coverage limits fall short of actual costs, you end up paying the difference out of pocket.

• Improvements That Exceed Your Limits: If you spent $80,000 renovating your unit but only carry $50,000 in improvements coverage, you face a $30,000 gap. Review your coverage limits whenever you complete renovations.
• Not Enough Loss Assessment Coverage: While most HO-6 policies include loss assessment coverage, the limits may not be high enough for large losses. If your policy includes $50,000 in loss assessment coverage but the AOAO charges $75,000 per unit after a large loss you pay the remaining $25,000 yourself. Consider higher loss assessment limits based on your building's age, size, and potential repair costs.

The Hawaii Insurance Market Reality

Finding condo insurance has gotten harder since 2022. Several major insurance companies have reduced their Hawai'i coverage or stopped writing new policies, though Hawaii enacted legislation in July 2025 to provide backup coverage options through state programs [7]. The changes affect both master policies that AOAOs carry and individual HO-6 policies that unit owners need.

Coverage remains available, but you should act early. Work with a local independent agent who understands Hawai'i's condo market and your building's specific master policy type.

The Bottom Line

Many lenders and AOAOs require HO-6 coverage if you have a mortgage. Even if you own your unit outright, skipping coverage puts your investment at risk. Schedule a meeting with a local independent insurance agent who understands Hawaii's condo market to protect your investment.

Next Steps

• Get a copy of your AOAO's master policy and current Certificate of Insurance from your property manager
• Review your current HO-6 policy limits annually

• New Oahu flood maps take effect April 29, 2026. Purchase flood insurance before the effective date if your building is affected (30-day waiting period applies)

   

*FEMA Flood Map Updates for Oahu: FEMA released preliminary updated Flood Insurance Rate Maps for Oahu on July 31, 2024. After a formal appeal period from March 13 to June 10, 2025, FEMA issued a Letter of Final Determination on October 29, 2025, beginning a six-month compliance period. The new maps are scheduled to take effect on April 29, 2026 [4]. Properties newly placed in flood zones may need to secure flood insurance once the maps become effective. Properties in these zones with federally backed mortgages must carry flood insurance.

Disclaimer: This article provides general information about condominium insurance for Hawaii residents. The information presented does not necessarily reflect all coverage options offered by Island Insurance. Examples are hypothetical and for illustrative purposes only. Insurance policies, coverage availability, and specific terms vary based on individual circumstances. For specific coverage details and personalized quotes, contact your independent insurance agent.

Frequently Asked Questions

Q: What's the difference between my AOAO's master policy and my HO-6 policy?

A: Your AOAO's master policy typically covers the building structure and common areas, while your HO-6 policy covers everything inside your unit and your personal liability.

Q: What's the difference between "bare walls-in" and "all-in" master policies?

A: Bare walls-in covers only the building exterior and common areas. You cover everything from drywall inward. All-in covers the building, common areas, and original fixtures. You cover upgrades beyond original installations.

Q: What is loss assessment coverage and why do I need it?

A: Loss assessment coverage pays your share when the AOAO charges a special fee after a disaster the master policy doesn't fully cover. Standard policies typically include $1,000 to $50,000 in coverage, though higher limits are available.

Q: Does my HO-6 policy cover floods, hurricanes, and earthquakes?

A: Standard HO-6 policies don't cover flood or earthquake damage, which require separate policies. Hurricane coverage may be included but with higher deductibles (2-5% of coverage), or may require a separate policy.

Q: How much coverage do I need for improvements and upgrades?

A: Calculate what it would cost to rebuild your improvements at today's Hawaii prices and review your coverage limits whenever you complete renovations.

Sources

1. Insurance Information Institute. "What is Condo Insurance?" Accessed October 2, 2025. https://www.iii.org/article/what-condo-insurance
2. Insurance Information Institute. "Facts + Statistics: Homeowners and renters insurance." Accessed October 2, 2025. https://www.iii.org/fact-statistic/facts-statistics-homeowners-and-renters-insurance
3. National Flood Insurance Program. "Flood Insurance Basics." FEMA. Accessed October 2025. https://www.fema.gov/flood-insurance
4. City and County of Honolulu Office of Climate Change, Sustainability and Resiliency. "Get Flood Ready." Accessed October 2025. https://www.resilientoahu.org/getfloodready
5. Insurance Information Institute. "Understanding Hurricane Deductibles." Accessed October 2025. https://www.iii.org/article/understanding-hurricane-deductibles
6. Insurance Information Institute. "Earthquakes and Insurance." Accessed October 2025. https://www.iii.org/article/earthquakes-and-insurance
7. Hawaii Business Magazine. "Insurance Crisis Worsens in Hawai'i's 'Condoland'." June 17, 2024. https://www.hawaiibusiness.com/hawaii-condo-insurance-market-challenges-crisis/
8. Hawaii Revised Statutes §514B-143(d) (2024). Available at: https://www.capitol.hawaii.gov/hrscurrent/Vol12_Ch0501-0588/HRS0514B/HRS_0514B-0143.htm