What Is an HO-6 Insurance Policy and What Does It Cover?

An HO-6 insurance policy is a specialized form of homeowner’s insurance for individuals who own a condominium or cooperative unit. It provides coverage for the unit owner’s personal property, liability claims, and certain interior components of the unit. This policy addresses the unique ownership structure of condo and co-op living, where ownership is shared with an association.

Defining the HO-6 Policy

An HO-6 policy is tailored to the distinct ownership model of condominiums and cooperatives, differing from standard homeowners’ insurance like an HO-3 policy. While an HO-3 policy covers both the structure and personal belongings of a standalone home, an HO-6 policy focuses on the unit owner’s responsibilities. Unit owners hold ownership of their individual unit’s interior. The condominium or cooperative association maintains ownership of the main building structure, shared common areas, and exterior elements. This division of ownership necessitates a specialized insurance product to cover the unit owner’s interests and obligations.

What an HO-6 Policy Covers

Personal property coverage protects the unit owner’s belongings inside their condominium or co-op unit. This includes furniture, electronics, clothing, and other personal possessions. The policy provides financial protection against losses from specified perils, including fire, theft, and vandalism. Coverage amounts should reflect the total value of the owner’s possessions.

Personal liability coverage protects the unit owner if found legally responsible for bodily injury or property damage to others. This coverage applies to incidents occurring within the unit or in common areas where the owner’s negligence is a factor. It helps cover legal fees, medical expenses, and damages awarded in a lawsuit.

Loss assessment coverage protects unit owners from special assessments levied by their homeowners’ association (HOA). These assessments can occur if damage to common areas exceeds the master insurance policy’s limits or if the master policy does not cover the specific type of loss. This coverage helps unit owners pay their share of such unexpected costs.

Coverage for unit improvements and additions addresses structural enhancements made to the unit by the owner. This includes upgrades such as remodeled kitchens, updated bathrooms, new flooring, or custom cabinetry. These improvements are not covered by the HOA’s master policy, making this HO-6 coverage important for protecting the owner’s investment.

Additional living expenses, often called loss of use coverage, provides financial assistance if the unit becomes uninhabitable due to a covered loss. This coverage helps pay for temporary housing, food, and other necessary expenses while the unit is being repaired. It ensures the unit owner is not burdened with unexpected living costs during displacement.

Relationship with Master Insurance Policies

The master policy covers the building’s exterior, shared common areas, and structural components like the roof and foundation. The association is responsible for insuring the collective property.

A “bare walls-in” policy covers only the building’s structure up to the unfinished surfaces of the interior walls, leaving the unit owner responsible for everything inside their unit, including fixtures and appliances. An “all-in” or “all-inclusive” policy may cover original fixtures and installations within the unit, reducing the unit owner’s HO-6 coverage needs for those items. An “original specifications” policy covers the unit as it was originally built, with the owner responsible for any upgrades. The specific type of master policy dictates what gaps the unit owner’s HO-6 policy must fill.

Tailoring Your HO-6 Coverage

Adjusting coverage limits for personal property ensures the policy adequately covers all belongings. For high-value items such as jewelry, artwork, or collectibles, unit owners may need to add scheduled personal property endorsements for higher coverage amounts.

Selecting an appropriate deductible is another way to tailor the policy; a higher deductible can reduce premiums but means greater out-of-pocket costs in a claim. Unit owners can also increase their liability limits beyond standard amounts for added protection against potential lawsuits. Endorsements can be added to address unique risks, such as flood or earthquake coverage, depending on the unit’s location.