AOAO Master Policy Claims: A Hawaiʻi Guide for Boards and Managing Agents

When a storm, fire or plumbing failure damages a condominium, the board and managing agent suddenly run a claim that touches every owner, every lender and sometimes every tenant. Decisions made in the first weeks, about mitigation, documentation and the deductible, shape the whole claim. This guide covers the master policy side. For a unit owner’s view, see Condo Water Damage: HO-6 vs. AOAO Master Policy.

What Hawaiʻi law requires the master policy to cover

Unless the declaration or bylaws provide otherwise, HRS §514B-143 requires an association to carry property insurance on the common elements and, in buildings with attached units, on the units, to the extent reasonably available, for full replacement cost against the risks covered by a special form policy. The master policy does not have to cover improvements and betterments that owners installed.

Where the line falls between a unit and the common elements is set by your declaration, bylaws and any insurance resolution. The board’s first job after a loss is to map the damage against those boundaries.

Deductibles: the hardest conversation

Master policies often carry large deductibles, and a hurricane or windstorm deductible may be a percentage of each building’s insured value. On a building insured for $40 million, a 5% hurricane deductible is $2 million before the policy pays. Numbers like that become special assessments.

Under HRS §514B-143, and subject to your governing documents, the board can generally handle a deductible in one of three ways:

1. Pay it as a common expense.
2. After notice and an opportunity to be heard, assess it against the owner whose unit caused the damage or where the damage started.
3. Require the owners of the affected units to pay it.

If a hurricane deductible was applied

Many Hawaiʻi policies tie the hurricane deductible to a hurricane watch or warning issued for the islands. After Tropical Storm and Hurricane Lala, the Hawaiʻi Insurance Division issued claims-handling guidance to insurers (Commissioner’s Memorandum 2026-7A), including that a storm’s classification is separate from any watch or warning, and that insurers keep records supporting coverage and deductible decisions. If the insurer applied a hurricane deductible, ask in writing for the exact policy trigger language and the facts it relied on. Our Hurricane Deductibles in Hawaii guide goes deeper.

Running a master policy claim: a board checklist

1. 01
   Protect people and the buildingStart emergency mitigation, secure openings and stop water. Photograph and video everything before cleanup.
2. 02
   Report in writingNotify the insurer and your broker, get the claim number, and confirm who the adjuster is and who they work for.
3. 03
   Gather the documentsThe full master policy with endorsements, the declaration, bylaws, insurance resolutions, the statement of values and recent reserve studies.
4. 04
   Map the damageRecord damage by unit and by common element, with dates of entry and photos for each unit.
5. 05
   Bring in the right expertsEngineers, building envelope consultants and contractors to define the full scope, priced for Hawaiʻi.
6. 06
   Decide and communicateAdopt the deductible allocation, then tell owners what the master policy covers and what to send their HO-6 insurer.
7. 07
   Track every dollarUse a separate account or expense code for claim costs, and log every payment and delay.
8. 08
   Answer in writingReview insurer estimates and engineer reports carefully, and respond in writing with your own support.

Coordinating with unit owners and their HO-6 insurers

A master policy claim is adjusted with the association, so individual owners usually cannot negotiate it on their own. Owners still have their own claims: improvements and betterments, contents, loss of use, and loss assessment. The board and managing agent can help those claims move by giving owners the deductible allocation, the master policy scope for their unit and the key dates.

When hurricane coverage is hard to find

In 2025, Act 296 reactivated the Hawaiʻi Hurricane Relief Fund to help condominium associations that struggle to find hurricane coverage. Eligibility is limited (for example, an association generally must have been turned down by two licensed insurers and have buildings insured for more than $10 million), the fund responds to losses above $10 million, and policies are sold through a licensed insurance producer. Ask your broker whether it fits your building, and keep reviewing the terms of your primary policy.

Where a public adjuster fits

With board approval, an association can hire a licensed public adjuster to prepare, document and negotiate the master policy claim. A public adjuster works only for the association, alongside the managing agent, engineers and association counsel. Island Claims is a licensed public adjusting firm, not a law firm, so legal questions about allocation disputes or governing documents belong with association counsel.

Common Questions