Owning a condominium unit comes with unique types of insurance needs that differ from the traditional homeowners insurance coverage. While the building itself and shared spaces are typically insured through the master insurance policy of the condominium association, individual owners are still responsible for protecting their individual unit and personal belongings. This is where a Condo-Owners or HO-6 Insurance Policy comes into play.
What is an HO-6 Insurance Policy?
An HO-6 Insurance Policy is a specific type of policy form designed for owners of condominium units. It protects the interior improvements of the condo rather than the entire building.
While most condominium associations include shared ownership of common areas, such as hallways, elevators, roofs, and exterior structures of the buildings, the condominium association usually carries a master insurance policy that covers these shared spaces and the buildings’ general structures.
An HO-6 Policy focuses on the portion of the building and unit that belongs to the unit owner. This typically includes the interior elements of the condominium and the owner’s possessions inside it.
How Do You Know What to Insure Under an HO-6 Policy?
Every Condominium Association operates under a legally binding document called a Declaration. The Declaration is filed in the public records and every unit owner takes subject to the Declaration when they purchase their unit. In most states, buyers of condos are legally required to be provided with a copy of the Declaration. It is highly recommended that potential buyers review the Declaration before purchasing.
The Declaration is the “insurance roadmap” for unit owners. It outlines what qualifies as common elements, what structural components the association must insure, identifies the portions of the building and condo unit which are the responsibility of the owner, identifies whether the association’s master insurance policy must provide coverage for “bare walls.” “single entity,” “all-in,” or something else, and describes if the unit owner is responsible for any portion of the deductible under the master insurance policy of the association.
In order to properly insure the condo-owner’s interests under an HO-6 Policy, insurance professionals need to review the Declaration of the condominium association and advise their clients of their responsibilities and exposures.
What Does an HO-6 Policy Cover?
Most HO-6 Insurance Policies provide several types of protection that help safeguard both property and the owner’s financial well-being:
Dwelling/Building Coverage:
This portion of the policy protects that part of the condo unit for which the owner is responsible under the Declaration. It can range from the “walls in” to just the “betterments and improvements” made to the unit since original construction.
Personal Property Protection:
This insurance covers contents and personal belongings including furniture, electronics, clothing, and other personal items up to a certain limit.
Personal Liability Coverage:
This part of the HO-6 Policy protects the unit owner if someone is injured inside the condo or if the owner accidentally causes damage to another person’s property (like another condominium unit). It also provides protection for the owner if they are found legally responsible for bodily injury or property damage to others away from their condo.
Loss of Use (Additional Living Expense):
If the condo unit becomes temporarily unlivable due to a covered insurance loss/event, this coverage can help pay for temporary living expenses such as hotel stays or short-term rentals and other out-of-pocket expenses the unit owner may occur while not able to stay in their condo.
Loss Assessment Coverage:
If the condominium association issues a special assessment, this insurance covers the owner’s share of that assessment. It can also covers the unit owner’s responsibility (if applicable) for their share of the deductible under the associations master policy. Loss Assessment is set up with a certain limit.
How HO-6 Insurance Works with Your Association’s Master Policy
Your condominium association’s master insurance policy typically handles the exterior of the buildings, the structural components, and shared areas. However, it rarely extends to the unit owner’s personal property and the “betterments and improvements” added inside the unit. Because of this gap, HO-6 Insurance Policies play a critical role in protecting what the association’s insurance policy does not cover.
Each condo association’s master insurance policy can be different. Some cover only the bare structure, while others may include limited interior elements. Reviewing your association’s
Declaration and master insurance policy will help determine what limits and coverage you need in your individual HO-6 Policy.
Is HO-6 Insurance Required?
In most cases, purchasing an HO-6 Insurance Policy is not legally required. If you have a mortgage on your condo, your lender will likely require an HO-6 or Condo-Owners Insurance Policy as a part of your loan agreement.
In almost every instance, the Declaration for your condo association will recommend and allow unit owners to carry insurance protecting their interests in their unit. Many associations also publish guidelines and suggested minimum levels of insurance coverage as part of the association’s handbook or rules.
Considering Additional Protection
While an HO-6 Insurance Policy offers essential protection, it may not address every possible risk. Depending on your location, lifestyle, and the value of your belongings, you may want to explore supplemental coverage options to strengthen your overall protection.
Speaking with an insurance professional and reviewing both your association’s Declaration and master insurance policy will ensure you have the proper coverage and help safeguard your assets and avoid financial disaster in the event of an unforeseen event.
Final Thoughts
Cond-Owners or HO-6 Insurance Policies serve as the foundation of protection for condominium owners. By properly covering the interior of your unit, your belongings, liability risks, and potential assessments from the association, the HO-6 Policy fills the gaps between your responsibilities under the Declaration and association’s master insurance policy. Taking the time to understand what your policy includes and where additional coverage might be beneficial, you can ensure your peace of mind as a condominium unit owner.