What is condo (HO-6) insurance?
Article Courtesy of Bankrate
By Cate Deventer
September 25, 2022
Your condominium is probably one of your most
valuable possessions, as are your priceless personal belongings. Like
standard homeowners insurance, condominium insurance can protect you
from financial hardship if your condo and its contents are damaged or
destroyed. Condominium insurance can also provide claims coverage if
others are injured in your condo.
A condo insurance policy is a relatively inexpensive way for affordable
and abundant peace of mind.
What is condo insurance?
Condo insurance, or an HO-6 policy, helps cover repair costs and
financial losses arising from damages to the condo or claims against the
condo owner. Condo insurance works in conjunction with a policy
purchased by the condominium complex’s management, typically called HOA
insurance or a master policy.
The insurance industry refers to condo insurance as an HO-6 policy.
Several types of HOA insurance policies provide different levels of
protection for unit owners. Since HOA policies generally only cover the
complex’s common elements or shared structures, you will want to
purchase an HO-6 policy to provide coverage for your specific condo and
the personal belongings within it.
What does condo insurance cover?
HO-6 policies generally cover the same types of perils as homeowners
insurance policies do for single-family homes, such as fire, explosions
and theft. Typically, condo insurance policies include the following
Dwelling: This protects the
interior of your condo, including damage to elements like sheetrock
Personal liability: Personal
liability coverage helps cover a person’s injuries and legal fees if
someone sues you over an incident in your condominium, including
attorney fees, court costs and a court settlement.
Personal property: This helps pay
to replace personal belongings, such as furniture, clothing and
electronics if a covered peril damages them or they were stolen.
Guest medical payments: When a
guest sustains an injury in your condo, guest medical payments
coverage can help pay the medical bills, such as the emergency room
fee, doctor bill and rehabilitation costs, up to your policy limit.
Loss of use: When a covered loss
requires you to temporarily move out of your condo, your loss of use
coverage can help pay accommodation and meal costs. If included in
your policy, loss of use coverage usually pays the difference
between your normal expenses and relocation costs.
It is important to know whether your policy covers
the actual cash value or replacement cost of the items damaged by a
covered peril. Typically a condo policy provides coverage for the
replacement cost of damaged items and the cost to repair damaged
interior structure elements or offers the option to acquire this level
of protection. Replacement cost coverage is the broader protection as it
pays the entire amount necessary to replace items. On the other hand,
actual cash value only pays the depreciated value since the original
Inclusions and exclusions
While most condo insurance policies include the coverage listed above,
there are typically specific exclusions from the standard coverage.
Although separate policies and riders can often be purchased to offer
the necessary coverage, standard condo insurance policies typically
Earthquake and flood coverage
Outdated systems or equipment that need to be
brought up to code
Damage from leaks or sewer backup
To provide the most protection, you may want to
consider these additional coverage options:
Unit assessment coverage: If the
HOA charges an additional assessment to condo owners to pay for a
covered loss, this add-on can cover a condo owner’s share of the
Umbrella policy: This is a separate
policy that increases your overall limit of liability protection.
Scheduled personal property: This
is additional coverage for itemized expensive items such as jewelry,
furs, art, fine wine or collectibles. This is often referred to as a
HOA insurance vs. condo insurance
HOA insurance includes two coverage types, liability and property. The
liability coverage of a master policy can help pay medical costs and
legal expenses if someone sustains an injury in a common area, like a
clubhouse, lobby or swimming pool, but does not cover injuries sustained
by guests within the walls of your condominium.
Condo management can choose between three types of property coverage:
All-in: All-in coverage provides
the most protection for unit owners, as it covers the condo’s
structure and any shared property. Additionally, it typically covers
improvements you have made to your condo, like custom tile and wall
Walls-in: Also called single entity
coverage, this provides slightly more protection than a bare walls
policy. It covers the building structure and systems, along with
built-in features within units, like kitchen cabinets and recessed
Bare walls: This type of coverage
provides the least protection for unit owners, as it only covers
common areas and the building structure and its systems, like
electrical wiring and plumbing. Your condo’s interior is not
Before purchasing an HO-6 condo policy, it helps to
know how much coverage the HOA policy already provides. If your complex
carries an all-in policy, you may not need to carry much dwelling
coverage. However, HOA policy exclusions are also important. For
example, a master policy may cover the interior structure of your condo
but exclude non-standard fixtures that you add, like expensive imported
tile or a custom stained-glass window.
Who needs condo insurance?
Anyone who owns a condominium or townhouse may want to consider
purchasing a condo policy, and if you have a mortgage on the property,
the lender usually requires it. The coverage you purchase is important,
and most standard condo policies include $100,000 to $300,000 in
personal liability, which you can usually increase to fit your needs. If
you think you need more liability protection than a standard policy can
provide, you could purchase an umbrella policy, which kicks in after you
reach the liability limit of your condo insurance policy.
Most insurance companies will help you determine the dwelling coverage
amount you need based on the square footage of the condo and finishes to
rooms like the kitchen and bathrooms. If you want to get a ballpark idea
about the coverage level you need, research the cost of construction in
your area to calculate roughly how much it would cost to completely
rebuild your condo, including materials, fixtures and labor. Condo
owners covered by an all-in master policy may only need enough dwelling
coverage to pay for losses the HOA policy excludes.
The replacement cost of your personal items should be considered as
well. Standard policies usually provide actual cash value personal
property coverage, which only pays the depreciated value for your
belongings. But most condo insurance carriers also offer optional
replacement cost coverage, which could replace your belongings at
current market prices.