Many often confuse Condo Insurance (HO6) with a Condo Association Policy (HOA).
In this guide, we break down the basics of Condo Unit Owners Insurance to help you understand the difference between what is covered under the Condo Owner’s policy and what is covered under the Condo Association policy.
First, to understand if you have the correct coverage for you unit, you will need a copy of the declarations and bylaws for your condo association. This is where you will find what the association is going to cover, as well as what you will be responsible for.
Condo unit owners’ insurance or HO6 is a policy that provides coverage for damage or loss to the individual condo unit owner’s property. This type of insurance is different from typical homeowners’ insurance, which covers a dwelling and its contents. It includes coverage for personal property, liability, and additional living expenses if the condo unit is unlivable.
Each condo association can have different bylaws, thus each unit owner’s policy could vary from association to association. Certain unit owners may need different types or different amounts of coverage than others in separate associations. We will do our best to highlight this.
Claims examples for Condo Unit Owners Insurance
To illustrate the importance of having condo unit owners insurance, here are a few claims that we have come across:
In one condo association, a unit owner left their gas stove on while they left the condo. The gas stove flared and caught the curtain on fire, then spread through the kitchen. These damages resulted in a claim of $95,000 to repair the damage done to the unit structure, all the stuff inside, and a place for the unit owner to stay while the repairs were made.
In a different condo association, one of the unit owners was having a holiday party, when one of their guests slipped and fell in the garage. The person that fell was badly injured and the unit owner’s insurance paid $3,500 from the liability portion of the policy.
What does Condo Insurance or (HO6 policy) cover?
Condo insurance is vital to the safety of your condo. Having an HO6 policy can help you pay for repairs if something happens, and it also covers all personal property in the event someone breaks in and steals your belongings.
The following are things you can expect your HO6 policy to cover:
The structure of the condo including permanent fixtures, as well as any modifications you’ve made, like built-in appliances and custom hardwood flooring, are all included. The amount of coverage needed really depends on what is covered by the master condo association policy. If there is an All-In coverage on the master insurance policy, you may not need to add significant dwelling coverage on your HO6. This is the most common coverage that unit owners have the wrong amount for. This amount should be cross-referenced with the bylaws to ensure the proper amount. For example, if the association is Walls Out coverage, then the unit owner should have dwelling coverage to fix the inside of the structure and permanent items.
Personal property/contents coverage.
If your property or belongings, such as clothing, appliances, furniture, or electronics, are harmed, stolen, or destroyed by a peril that is covered by your policy, your HO6 policy will pay for the expense of replacing or repairing those belongings.
Personal liability coverage.
Personal liability coverage protects you if you are held legally responsible for someone else’s harm or property damage to other people’s property. Typical examples for this coverage are if a friend slips and falls in your condo or you damage your neighbor’s porch or fence by accident. These types of situations can draw a lot of lawsuits or translate into heavy hospital bills, so you’ll want to make sure there’s enough money in your personal liability buffer for the worst-case scenario.
If you feel like you need additional personal liability coverage to what is initially included on the HO6, you can always increase the liability limits with a personal umbrella policy.
Loss of use coverage.
If your home becomes unsafe or uninhabitable due to a loss caused by a covered peril, the loss of use coverage will cover for the additional living expenses. Loss of use coverage will pay for things like your hotel and relocation costs if you are forced to move out while your condo unit is being repaired, for example, after a pipe burst or a house fire.
Loss assessment coverage.
Loss assessment insurance coverage, or special assessment coverage, is a voluntary coverage that you may choose to purchase with your condo insurance policy.
The best example for this would be if there is a fire in two of the units in a four-unit building. If the bylaws of the association state that the unit owner is responsible for covering the deductible of the master condo policy, then the association can assess the unit owner for that amount. This coverage makes it so you don’t have to come out of pocket for this.
Back-Up of Sewer and Drains.
Water back up from sewers and drains or a sump pump overflow coverage is excluded from an HO6 policy. This coverage can be added for an additional premium.
Medical payments coverage can help cover medical expenditures if a visitor trips down the stairs during a gathering or visit to your condo. This coverage only includes medical expenses incurred by someone who isn’t a member of your household. If you or someone from your family gets injured in your condo, you’ll have to rely on your health insurance.
There are many other coverages available and sometimes included in your HO6 policy. A few of those being:
Specifically Scheduled items, such as jewelry, guns, art, bikes, and other items like this. Other structures like detached sheds and detached garages.
What does an HOA Master Policy (Condo Association policy) cover?
Each association can vary depending on how the bylaws are written, but in general, all shared areas in a condo complex are covered under a Master HOA policy, which is typically purchased by the condo association. This includes the roof and exterior of the building and interior rooms such as lobbies, hallways, corridors, and elevators.
The cost of the Master HOA policy is divided among all unit owners in the form of recurring expenses. The following are three primary classes of condo master coverages:
Bare walls coverage.
Basic insurance plan that covers the building as well as most fixtures and furniture in common areas. It can also cover any condominium unit owned by the condo association.
Single entity coverage.
The policy includes everything in the Bare Walls plan, plus coverage for the built-in fixtures and other elements added in the condo by the owner.
The All-In coverage applies to all residential property owned by the condo association or connected to the condominium structure, regardless of whether they are individually owned units. It is the most extensive condo master insurance plan, including coverage for both condominium improvements and additions.
The importance of the HOA coverage will greatly impact the amount of the needed coverage on your individual HO6 plan, so make sure to get a copy of the condo association bylaws.
The difference between Condo Unit Owners Insurance Policy and a Master Policy? (HOA vs. HO6)
Master condo association insurance policies and HO6 policies should work together to provide coverage where the other does not (assuming coverage exists). The true way to find out what yours should have is by reading, or having an insurance professional read the associations bylaws. Some associations provide coverage for a lot, some associations provide coverage for less. There are many nuances that come into play.
In conclusion, the HO6 coverage is necessary in order to cover the perils that the master association will not. Having the right HO6 policy can make a claim way more of a smooth process.
Please visit our website or call us at 800-886-2398 for more information on Condo Unit Owners Insurance (HO6). Our agents are always ready to help you find the best coverage for your needs.