When a kitchen fire, a burst pipe, or a storm damages a Tennessee condominium building, unit owners naturally ask who files the claim and where the money goes. For condominiums under the Tennessee Condominium Act of 2008, Tenn. Code § 66-27-413 answers both. A loss covered by the association's property policy must be adjusted with the association. The proceeds are payable to an insurance trustee or the association, not to any mortgagee, and they must be spent first on repairing or restoring the damaged property.
| Question | What § 66-27-413 says |
|---|---|
| Who adjusts the master-policy loss? | The association |
| Who receives the check? | A designated insurance trustee, or otherwise the association; not a mortgagee or deed-of-trust beneficiary |
| How is it held? | In trust for unit owners and lienholders as their interests may appear |
| What is paid first? | Repair or restoration of the damaged property; owners get nothing unless there is a surplus after full repair, or the condominium is terminated |
| Must the association rebuild? | Promptly, unless the condominium is terminated, repair would be illegal, or 80% of owners vote not to rebuild |
| Costs above proceeds and reserves? | A common expense |
Source: Tenn. Code § 66-27-413 (Justia).
The association runs the master-policy claim
Because the loss is adjusted with the association, the board or its manager deals with the master insurer's adjuster on building damage. As a unit owner, your job is to document what happened in your unit, report it to the association quickly, and open a claim on your own HO-6 policy for what that policy may address. How far the master policy reaches into your unit depends on your declaration; see Tennessee’s condo law sets an 80% master-policy floor, and your HO-6 still has to fill the gaps. and Tennessee condo law says your HO-6 has to cover the upgrades the master policy can skip.
Where the money goes, and in what order
The statute says the trustee or association holds the proceeds in trust for unit owners and lienholders as their interests may appear. Subject to the rebuilding rules, the proceeds must be disbursed first for the repair or restoration of the damaged property. Unit owners and lienholders are not entitled to any portion unless there is a surplus after the property has been completely repaired or restored, or the condominium is terminated. In practice, that means a master-policy check is not a cash payout to individual owners.
When the building does not get rebuilt
The association must repair or replace damaged insured portions of the condominium promptly unless the condominium is terminated, repair would be illegal under a state or local health or safety statute or ordinance, or 80% of the unit owners, together with 80% of owners of units assigned limited common elements that will not be rebuilt, vote not to rebuild. If units are not rebuilt, the proceeds attributable to those units must be distributed to the owners of those units.
If repairs cost more than the insurance proceeds and reserves, the excess is a common expense. That is where an owner's own coverage for assessments matters: Tennessee condo law lets your association bill you for uninsured damage and put a lien on your unit if you do not pay.
Protections built into the master policy
- Owners are insureds for common-element liability. Each unit owner is an insured person for liability arising out of the owner's interest in the common elements or membership in the association.
- Subrogation is waived. The insurer waives subrogation against any unit owner, lessee, or household member, unless an act with intent to cause the loss was the cause.
- One owner cannot void it. No act or omission by a unit owner, unless acting as a board member, will void the policy or be a condition to recovery.
- The master policy is primary. If a unit owner has other insurance on the same risk at the time of the loss, the association's policy provides primary insurance.
Notices owners should watch for
If the required insurance is not reasonably available, the association must promptly notify all unit owners by hand delivery or prepaid U.S. mail. The master insurer also may not cancel or refuse to renew until notice is mailed to the association and each additional insured under the policy. If either kind of notice reaches you, review your HO-6 limits right away. For a Smokies-specific look at master-policy gaps, see Pigeon Forge Condo Insurance: Where Your HO-6 Policy Starts and the Master Policy Stops, and keep your own TDCI glossary: what your insurance declarations page shows. handy.
A short checklist after a building loss
- Report the damage to the association and ask who the adjuster is.
- Photograph your unit, including improvements you made.
- Notify your HO-6 insurer and ask how it coordinates with the master policy.
- Ask the board for the master policy's deductible and any planned assessment.
- If you have a mortgage, tell your servicer that master-policy proceeds go to the association or trustee.
If you believe an insurer did not follow Tennessee law, you can contact TDCI: How Tennesseans file an insurance complaint with TDCI’s Consumer Insurance Services.
This article is informational only and is not legal advice. It does not promise coverage, eligibility, or any claim result. Your declaration, bylaws, policy forms, and Tennessee law control.
Related reading from All Seasons
- Tennessee’s condo law sets an 80% master-policy floor, and your HO-6 still has to fill the gaps.
- Tennessee condo law says your HO-6 has to cover the upgrades the master policy can skip.
- Tennessee condo law lets your association bill you for uninsured damage and put a lien on your unit if you do not pay.
- Pigeon Forge Condo Insurance: Where Your HO-6 Policy Starts and the Master Policy Stops
- TDCI glossary: what your insurance declarations page shows.
- How Tennesseans file an insurance complaint with TDCI’s Consumer Insurance Services.
Free policy review
All Seasons Insurance Group offers a free personal policy review. Call 865-263-1400 or visit asigtn.com/get-a-quote/. This article is informational only and does not promise coverage or eligibility; your policy forms control. Seasons change. So should your coverage.
Who files the master-policy claim after damage to a Tennessee condo building?
Under Tenn. Code 66-27-413, a loss covered by the association's property policy must be adjusted with the association.
Does the master-policy check go to unit owners or their lenders?
Proceeds are payable to a designated insurance trustee or to the association, not to any mortgagee or deed-of-trust beneficiary, and are held in trust for owners and lienholders.
Can owners get a share of the master-policy money?
Not until the property is completely repaired or restored and a surplus remains, or the condominium is terminated. Proceeds go to repairs first.
Does the association have to rebuild?
It must repair or replace promptly unless the condominium is terminated, repair would be illegal, or 80% of owners vote not to rebuild.
Who pays if repairs cost more than the insurance?
The cost of repair or replacement beyond insurance proceeds and reserves is a common expense of the association.
Can the master insurer sue me if I caused the damage?
The statute requires the insurer to waive subrogation against unit owners, lessees, and household members, unless an act intended to cause the loss was the cause.
Which policy pays first, the master policy or my HO-6?
If a unit owner has other insurance on the same risk at the time of the loss, the association's policy provides primary insurance.
How can All Seasons help after reading this?
Call 865-263-1400 or visit asigtn.com/get-a-quote/ for a free personal policy review. Informational only; no coverage promises. Seasons change. So should your coverage.
