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

HO-6 insurance is a specialized form of homeowner’s insurance for condominium or co-op unit owners. This policy addresses the distinct insurance needs of these homeowners, differing significantly from standard homeowner’s policies designed for single-family residences. It protects the interior of the unit, along with the owner’s personal belongings and liability.

Defining HO-6 Insurance

HO-6 insurance, often referred to as condo insurance, is tailored for condominium unit owners, co-op owners, and some townhome owners within communities that feature shared common areas. Unlike a standard HO-3 homeowner’s policy, which covers the entire structure and land of a single-family home, an HO-6 policy focuses on the interior of an individual unit. This distinction arises because the exterior structure and common elements of a condominium or co-op building are typically covered by a master insurance policy held by the homeowners association (HOA) or co-op board.

The HO-6 policy is designed to cover what the master policy does not, primarily the property from the “walls in.” This includes the interior structural components of the unit, such as walls, flooring, and fixtures, along with the owner’s personal property. It also provides liability coverage for incidents occurring within the unit.

Core Coverage Components

HO-6 policies encompass several components to provide protection for unit owners. These coverages address risks to the unit’s interior, personal possessions, and the owner’s financial liability.

Dwelling Coverage

Dwelling Coverage (Coverage A) protects the interior elements of the condominium or co-op unit. This includes permanent fixtures like built-in appliances, cabinets, wall coverings, and flooring. It also extends to structural improvements or upgrades made by the owner within the unit.

Personal Property Coverage

Personal Property Coverage (Coverage C) safeguards the owner’s personal belongings inside the unit. This encompasses items such as furniture, electronics, clothing, and other movable possessions. Coverage can be provided on an actual cash value basis, which accounts for depreciation, or a replacement cost basis, which covers the cost to replace items with new ones of similar kind and quality.

Loss of Use Coverage

Loss of Use Coverage (Coverage D) provides financial assistance if the unit becomes uninhabitable due to a covered peril. This coverage helps with additional living expenses, such as temporary housing, meals, and other necessary costs incurred while the unit is being repaired. For instance, if a burst pipe makes the condo unlivable, this coverage can pay for a hotel stay.

Personal Liability Coverage

Personal Liability Coverage (Coverage E) protects the unit owner against claims for bodily injury or property damage to others. This applies if an incident occurs within the unit or if the owner is found legally responsible for damage elsewhere. For example, if a guest slips and falls inside the condo, this coverage can help with legal expenses and medical bills.

Medical Payments to Others

Medical Payments to Others (Coverage F) covers minor medical expenses for guests injured on the property, regardless of who was at fault. This provides a limited amount of coverage for immediate medical needs without requiring a liability claim.

Relationship with Master Insurance Policies

Understanding the distinction between an individual HO-6 policy and the master insurance policy held by the homeowners association (HOA) or co-op board is fundamental for condominium and co-op owners. The master policy typically covers the building’s exterior, common areas, and shared systems like the roof, hallways, and elevators. This collective policy is usually funded through HOA dues paid by all unit owners.

The type of master policy in place directly influences the scope of coverage required by an individual HO-6 policy.

Types of Master Policies

A “bare walls-in” master policy covers only the building’s structure, including the exterior framing and shared elements, leaving the unit owner responsible for everything inside their unit, from drywall to fixtures.
A “single entity” master policy offers more extensive coverage, including built-in property like original fixtures within the unit, but generally excludes upgrades or personal belongings.
The most comprehensive, an “all-in” master policy, covers the building’s structure, common areas, and most original fixtures and installations within individual units.

An HO-6 policy serves to fill the gaps left by the master policy. For instance, even with an “all-in” master policy, an HO-6 policy is still needed to cover personal belongings and any improvements or upgrades the owner has made. If the master policy has a high deductible, an HO-6 policy can include loss assessment coverage, which helps pay for the unit owner’s share of costs levied by the HOA for damages exceeding the master policy’s limits.

Determining Your Coverage Needs

Assessing the appropriate levels of coverage for an HO-6 policy involves several considerations specific to condominium and co-op ownership. A thorough review of the HOA’s master insurance policy is a primary step, as its type dictates how much dwelling coverage is needed for the unit’s interior. For example, if the master policy is “bare walls-in,” the unit owner will need more dwelling coverage for interior structures.

Valuing personal property accurately is also important to ensure adequate coverage for belongings. Creating a detailed inventory of all possessions, ideally room by room, helps in estimating their replacement cost. Documenting items with photographs or videos and keeping receipts for significant purchases can expedite claims processing. While a general estimate for personal property coverage might range from $40,000 to $60,000 for smaller homes, this should be adjusted based on individual lifestyle and high-value items.

Considering any upgrades or improvements made to the unit is another aspect of determining dwelling coverage. Renovations such as new flooring, custom cabinetry, or upgraded fixtures increase the value of the unit’s interior and should be accounted for in the HO-6 policy’s dwelling coverage. Obtaining quotes from contractors for the cost to rebuild the interior can help establish an appropriate coverage amount.

When assessing liability coverage, unit owners should consider their total assets, including savings, investments, and other valuable possessions. Liability coverage limits for individual condo insurance typically start around $100,000. However, it is advisable to select a limit that can protect these assets in the event of a lawsuit.

Beyond the standard coverages, unit owners may consider additional endorsements or riders. These can include coverage for specific high-value items like jewelry or art, which might exceed standard policy limits. Additionally, depending on the unit’s location, specialized coverage for perils like floods or earthquakes might be beneficial, as these are typically excluded from standard HO-6 policies.