HO-6 Condo Insurance Policy

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   If you’re a condo owner, you definitely have our congratulations and probably a HO-6 insurance policy. If you don’t, then rest assured that you’re reading the right article. After all, don’t you want your beautiful condo insured?

The HO-6 policy is a homeowners insurance policy specifically for owners of condominiums or a cooperative setting, two types of properties that are very specific in their insurance needs. Condominium owners may be entitled to their condos and everything within, but the exteriors of the house, including any lawn or landscaping, are all under the purview of the concerned homeowners’ associations. Additionally, frequent changes in condo laws affect the insurance needs of condos, resulting in HO-6 condo insurance policies being highly customizable.

The HO-6 Policy Explained

The HO-6 policy provides coverage for your personal property (within the condo or co-op), specific coverage for any improvements you make to the condo as its owner, and liability coverage. Let’s understand this a little better, shall we?

  • Personal Property Coverage: This means that a HO-6 policy covers personal property or possessions.
  • Improvements to Your Condo: Any additions, alterations, or deletions to the interiors of your condo are covered by the HO-6 policy.
  • Liability Coverage: Liability coverage refers to the coverage that is provided in case of an injury to a person inside your condominium or co-op, such as water leakage from your condo affecting the occupants of the floor below. In this case, your insurance will cover the repairs.

Thus, any interior damage, improvements (additions or deletions), and even additional living expenses (for temporary residence if your condo is damaged by a covered peril) are all insured in a typical HO-6 policy. Any extra coverage can be endorsed, such as coverage for your valuables, and natural disasters like flooding, storms, and earthquakes.

Many condo owners assume that the master insurance policy taken by their homeowners’ associations is sufficient protection. However, this policy’s coverage only extends to the exteriors, making HO-6 a necessity. The master policy only covers common areas such as the elevator, basements, hallways, roof, boiler and commonly used walkways for both physical and liability damage.

Coverages of a HO-6 Policy

  • A HO-6 policy covers your additional living expenses, such as temporary residence in case your condo is too damaged to reside in, caused by a covered peril.
  • Covers the improvements you make to your condo, especially if required by the homeowners’ association, such as roof repairs, wiring and so on.
  • Coverage for the interior floor, its coverings and the walls.
  • Coverage for any damages to personal property such as your computer, clothing or furniture.
  • Provides coverage where the condominium master policy doesn’t, for both liability and personal property.

Condo policies generally have a fairly small and inexpensive deductible. As per the law, an HO-6 insurance policy must cover at least 20% of the condominium’s estimated value.

Points to Remember While Buying HO-6

  • Most condo owners make the mistake of only insuring for the amount that their condo is valued at, instead of estimating the cost it would take to replace any damaged items, which may turn out to be a higher value than the condo’s value.
  • Before purchasing HO-6, check with the condo or co-op homeowners’ association to see what is already covered in the master insurance policy.
  • Though such policies rarely cover your condos’ interiors and personal property, some may cover more liability. Additionally, your homeowners’ association may have restrictions or requirements to comply with when purchasing a separate HO-6 policy.
  • Sometimes, the master policy may not be sufficient to cover losses in severely catastrophic events. To protect your unit in such cases, purchase additional coverage in the form of contingent or loss assessment coverage.
  • Your HO-6 policy doesn’t cover earthquake damage, so you may need to separately endorse this into the policy.
  • Make use of insurance discounts that you are eligible for!

A Parting Note

If you’re still debating on getting a HO-6 policy, here’s something that may make the decision for you: It is a requirement as per the law. Under FNMA and FHA regulations, lenders now require HO-6 policies to purchase new condos.

However, even if it wasn’t required by the law, HO-6 policies are only good. Getting one isn’t going to harm you; it can only better your case in the event of damage. A great thing about this policy is that it covers liability damage, so even if injured parties sue you for damages, your policy covers it; without it, you may take a huge financial beating! Additionally, it protects the interiors of your condo and keeps you off the streets if severe damage to your condo is keeping you from residing in it, by covering additional living expenses.

Despite all this, while it may seem like a no-brainer getting a HO-6 policy, make sure you put in the necessary thought, research, and consideration before buying one by paying attention to its coverages and terms!

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