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

An HO-6 insurance policy is a specialized form of homeowner’s insurance for condominium or co-op unit owners. This policy safeguards the interior components of the unit and the owner’s personal belongings. It provides protection where the condominium association’s master policy may not extend coverage, ensuring a unit owner’s financial interests are protected.

Understanding HO-6 Insurance

HO-6 policies are necessary for condominium and co-op unit owners because standard homeowner policies, like an HO-3, are not suitable for this ownership structure. When you own a condominium, you typically possess the interior of your unit from the “walls-in.” This includes the structural elements within your living space, distinguishing your responsibilities from a traditional homeowner who owns the entire building and land.

The shared ownership model in a condominium association requires a distinct insurance approach. While the association maintains a master policy for common areas, individual unit owners are responsible for their unit’s interior. An HO-6 policy is specifically tailored to address this “walls-in” ownership, covering the parts of the property for which the unit owner is financially accountable.

What an HO-6 Policy Covers

Interior dwelling coverage, sometimes referred to as building or unit coverage, protects the structural elements inside your unit. This extends to items like walls, floors, ceilings, built-in appliances, fixtures, and any improvements or alterations made by the owner, safeguarding them from perils such as fire, theft, or vandalism.

Personal property coverage protects the owner’s movable belongings, including furniture, electronics, clothing, and other valuables. This coverage applies whether these items are inside the unit or outside of it. Policies may offer coverage based on Actual Cash Value (ACV), which accounts for depreciation, or Replacement Cost Value (RCV), which pays to replace items with new ones.

Loss of use coverage, also known as additional living expenses, provides financial assistance if the unit becomes uninhabitable due to a covered loss. This can cover costs for temporary housing, meals, and other necessary living expenses while repairs are underway. This coverage ensures that a unit owner maintains a similar standard of living during displacement.

Personal liability coverage offers protection if the unit owner is found legally responsible for bodily injury to another person or property damage. This applies to incidents occurring within their unit or in other locations. Medical payments to others coverage can also help pay for minor medical expenses if a guest is injured on the property, regardless of fault.

Distinguishing HO-6 from Master Policies

The master policy typically covers the building’s common areas, such as lobbies, hallways, roofs, and exterior walls. This also extends to shared amenities like swimming pools, fitness centers, and parking lots.

Master policies can vary in scope, influencing the necessary coverage for an HO-6 policy. A “bare walls-in” policy covers the building’s structure up to the drywall, leaving the unit owner responsible for everything inside, including fixtures and appliances. An “all-in” or “single entity” policy may cover more, including original fixtures and improvements made to the unit.

The HO-6 policy complements the master policy, filling coverage gaps where the association’s policy ends. For instance, if a burst pipe in a unit causes damage, the master policy might cover structural damage to the building, while the HO-6 policy covers the interior of the unit and personal property. Both policies work together to provide comprehensive protection, each addressing different aspects of the property.

Key Considerations for Your HO-6 Policy

Deductibles impact premiums; choosing a higher deductible generally lowers the premium, while a lower deductible results in higher premiums. Select a deductible amount that is manageable in the event of a claim.

Establishing appropriate coverage limits for interior dwelling and personal property is important. This involves assessing the value of improvements made to the unit and the total worth of personal belongings, including any valuable items. An endorsement for personal property replacement cost value should be considered to avoid depreciation in claim payouts.

Loss assessment coverage is an important endorsement that protects unit owners from special assessments levied by the HOA. These assessments can occur when damage to common areas exceeds the master policy’s limits, requiring unit owners to contribute their share. While standard HO-6 policies might include a minimal amount, often around $1,000, increasing this coverage can provide a financial safety net.

Other endorsements to consider include water backup coverage, which protects against damage from sewer or drain backups. Reviewing the HOA’s master policy and bylaws is important to understand the division of insurance responsibilities. This review helps identify any specific requirements or gaps that your individual HO-6 policy needs to address.