What Is an H06 Policy and What Does It Cover?

An H06 policy is a specialized form of homeowners insurance for condominium or co-op unit owners. It provides protection against financial losses related to the interior of the property and the owner’s personal belongings. This policy bridges potential coverage gaps, ensuring a unit owner is protected. It differs from a standard homeowners policy, which typically covers an entire standalone structure.

Core Purpose of an H06 Policy

An H06 policy addresses the insurance needs of condominium unit owners, whose properties are part of a larger structure governed by a Homeowners Association (HOA). The HOA typically maintains a master insurance policy that covers the common areas of the building, such as exterior walls, roofs, hallways, and shared amenities like pools or gyms. This master policy primarily protects the building’s overall structure and shared spaces.

However, the HOA’s master policy generally does not extend to the interior of individual units or to the personal belongings of the unit owners. This is where an H06 policy becomes necessary, as it covers what the master policy typically does not. It ensures that the individual unit owner is protected against damages or losses that fall outside the scope of the shared association coverage. The H06 policy essentially picks up where the master policy ends, providing “walls-in” coverage for the unit’s interior and everything within it.

Specific Coverage Provided by an H06 Policy

An H06 policy offers categories of coverage tailored to condominium ownership, complementing the HOA’s master policy. Dwelling coverage, or “walls-in” coverage, protects the interior structure of the unit. This includes fixtures, cabinets, flooring, built-in appliances, and any improvements or alterations made by the owner, from the “studs in.” The HOA’s master policy typically covers the building shell and common areas, leaving the unit’s interior elements as the owner’s responsibility.

Personal property coverage protects the policyholder’s personal belongings, such as furniture, electronics, and clothing, against covered perils like fire or theft. This coverage extends to items within the unit and sometimes to belongings lost or stolen outside the unit. Should a covered loss make the unit uninhabitable, loss of use coverage, also known as additional living expenses, covers costs for temporary housing and other increased living expenses.

Personal liability coverage protects the policyholder against claims for bodily injury or property damage to others. This applies whether the incident occurs within the unit or elsewhere. Medical payments to others coverage pays for medical expenses for guests injured on the property, regardless of fault.

Key Components of an H06 Policy

Deductibles represent the amount a policyholder must pay out-of-pocket before the insurance coverage begins for a claim. This amount is subtracted from the total claim payout. Each type of coverage within an H06 policy, such as dwelling, personal property, or liability, is subject to specific coverage limits, which are the maximum amounts the insurer will pay for a covered loss.

H06 policies operate on either a “named perils” or “open perils” basis. Named perils policies cover only specific listed risks (e.g., fire, theft, vandalism), while open perils policies cover all risks unless specifically excluded. Many H06 policies cover personal property on a named perils basis. Policyholders can add endorsements or riders for additional coverage, such as for valuable jewelry, identity theft protection, or water backup. When personal property is damaged or lost, claims are settled based on either actual cash value (ACV), which accounts for depreciation, or replacement cost value (RCV), which pays to replace the item without deducting for depreciation.

Considerations for an H06 Policy

Accurately valuing personal property is important to ensure adequate personal property coverage. Creating a home inventory can help assess the total value of belongings, as standard policies may have limits for certain high-value items. Unit owners should insure any structural upgrades or improvements they have made beyond the original builder-grade finishes, such as kitchen remodels or new flooring. These enhancements are the owner’s responsibility and need to be adequately covered.

Loss assessment coverage is an optional addition protecting against HOA assessments. These can occur when common area losses exceed the master policy’s limits or when its deductible is passed to unit owners. Policyholders should consider liability coverage limits based on their personal assets and potential risks; many insurers offer a minimum of $100,000. Reviewing the HOA’s master policy and bylaws helps identify coverage gaps the H06 policy needs to address.