Where the cost lands

This is the part boards and owners consistently miss. A per-unit deductible on the master policy triggers a mandatory unit-owner policy, and that policy's limit is tied to the deductible.

Fannie Mae's table: the borrower must carry a unit owners policy when “any portion of the interior of the unit or improvements to the unit are not covered by the master property insurance policy, or the master property insurance policy includes a per unit deductible.” The required amount is “at least equal to the greater of: • an amount sufficient to cover any portion of the interior of the unit or improvements to the unit not covered by the master property policy in order to restore the unit to its condition prior to a loss event; or • the amount of the per unit deductible…”

And the perils must match: “If the master property insurance policy includes a per unit deductible applicable to a specific required peril, the unit owners property insurance policy must include coverage for that peril.” The owner's own deductible is capped at “the greater of • 5% of the property insurance coverage amount, or • $2,500.”

So an association that accepts a $50,000 per-unit deductible to hold its master premium down has, in the same decision, obliged every mortgaged owner in the building to carry $50,000 of unit coverage. The saving is at the association level; the cost is at the owner level; and the two appear on different bills.

Buy-backs are expressly permitted

Freddie Mac blesses one mitigation directly: “PUDs, ground lease communities, condominium HOAs and Cooperative Corporations may purchase a deductible buy-back insurance policy to meet our deductible requirements, provided the policy meets all other applicable property insurance requirements…” That is a route for an association facing a quoted deductible above the ceiling, and it keeps the cost on the association's side of the ledger.

The peril they named was not wildfire

The one peril both agencies singled out is wind: “Named storms designated by the U.S. National Weather Service or the National Oceanic and Atmospheric Administration by a name or number are a required component of windstorm coverage.”

New Mexico has effectively no named-storm exposure. Neither agency created a wildfire deductible carve-out, a wildfire peril mandate, or any wildfire analogue of the named-storm clause. The federal secondary market wrote rules shaped by hurricane states and left wildfire states with a $50,000 ceiling and an HO-6 requirement.

That matters here more than almost anywhere. New Mexico recorded more than 6,200 homeowner non-renewals in 2025 — an all-time record and nearly triple the roughly 2,200 recorded in 2021 — according to figures the Superintendent of Insurance presented to the Legislative Finance Committee.² Accounts of that presentation differ on which counties were named as worst affected — Taos is the only one common to both — so treat any county list with caution. What is not in dispute is the direction. Associations in the wildfire-exposed north are the ones most likely to be offered a large per-unit deductible, and now the ones most likely to be able to accept it.

What changes at renewal

Ask the broker three questions in writing. Does the policy carry a per-unit deductible, a per-occurrence deductible, or both — and for which perils? If there is a per-unit deductible, what is the figure, and has every owner been told in writing that their unit policy must carry at least that limit for that peril? And what does a deductible buy-back cost, compared with the premium saving the deductible buys?

An association that answers the first question and not the second has transferred a five-figure exposure onto owners who do not know they are carrying it.