An HO-6 policy, also known as condo insurance, is a type of homeowners insurance for condo and co-op owners. An HO-6 contains coverage for your personal belongings, your liability, and special protection for improvements or alterations to the unit.
Your HO-6 policy should complement your condo association’s master policy. Condo association policies can vary, but they typically cover everything outside the walls of each individual condo unit, including the condominium building itself, and liability expenses if a guest is injured in a common area. How much condo insurance you’ll need is directly correlated to the type of master policy your building has.
What is HO-6 condo insurance?
The term “HO-6” refers to a form of property insurance intended for condo owners.
Here is a look at the coverage usually included in a standard HO-6 condo insurance policy, as well as the reimbursement limits of each coverage component.
What does this coverage do?
What is the insured coverage limit?
Section I - Property Coverages
Covers alterations or improvements made to the unit. Also covers any structural part of the unit that is your insured responsibility
Replacement cost of the insured property
Covers your personal belongings both inside and outside the condo
Actual cash value (optional replacement cost add-on). Coverage limits vary by company.
Pays for additional living expenses while your home is being repaired
20% of personal property limit
Additional coverages in a standard policy—like debris removal, loss assessment and credit card forgery protection
Varies by coverage type
Section II - Liability Coverages
Pays for legal and medical bills if you're held liable for injury or personal property damage to someone else
If a guest is injured in your condo, it pays for their medical bills, regardless of who is at fault
How much HO-6 condo insurance do I need?
How much condo insurance coverage you need will depend on the level of coverage in your condominium building’s master policy. You’ll generally want to find out how the interior structure of your condo is covered by the building policy prior to setting up your own. There are three main kinds of master policies that determine how much dwelling coverage you need in your condo policy:
Bare walls coverage: A bare walls policy covers just the structure of the condo, so basically everything behind the condo walls, including the drywall itself, framing, wiring, plumbing, and insulation.
Single entity coverage: Single entity coverage protects everything that a bare walls policy covers, but includes coverage for fixtures, like countertops, sinks, and built-in appliances. It typically doesn’t include coverage for alterations.
All-in coverage: This is the most comprehensive type of coverage, and if your building has this type of master policy you likely don’t need to add any dwelling coverage to your condo insurance policy. All-in master policies cover the entire interior structure of the condo, including fixtures, appliances, and alterations.
What does HO-6 condo insurance cover?
Your HO-6 policy will list all of the perils the condo itself and your belongings are protected from. Here’s a look at causes of loss that are covered, and causes of loss that aren’t covered, by a standard HO-6 policy.
What is covered by condo insurance
What isn't covered by condo insurance
Fire or lightning
Windstorm or hail
Riot or civil commotion
Routine wear and tear
Weight of snow, ice, or sleet
Accidental discharge or overflow of water or steam
Sudden and accidental tearing apart, cracking, burning or bulging
Freezing of plumbing
Sudden and accidental damage from electrical current
What is loss assessment coverage in an HO-6 policy?
Loss assessment coverage is additional coverage that you can add to your condo insurance policy. If there’s damage to a common area, and the cost of repairs exceeds the master policy coverage limits, your HOA may split the remaining costs amongst members. Loss assessment coverage is designed to cover those costs.
Consider increasing your loss assessment coverage limits
Most condo insurance policies come with around $1,000 in loss assessment coverage, but you can often increase your limit up to around $50,000. If you’re a resident of a condo association, consider maxing out your loss assessment coverage in the event you’re assessed an exorbitant amount.
With loss assessment coverage, you’re protected in three distinct ways. You’re protected from:
1. Building property damage
If you’re assessed for covered damages to common areas that the condo association is responsible for, loss assessment coverage will reimburse your portion of the assessment. You’re typically only assessed for damages when the master policy coverage has reached its limit.
2. Liability assessments
A loss assessment coverage endorsement can also help pay your portion of liability damages if your condo association is held legally responsible for a guest’s injury in a building or common area.
If someone is badly injured in the community pool area and the victim’s family sues for $1.2 million, if the master policy limit is $1 million, your association may assess $200,000 to association members. If the condo association has 25 members, $8,000 would be assessed to each unit.
3. Master policy deductible assessments
Some condo associations may even assess the master policy deductible out to members after a loss. If you’re assessed a portion of the deductible, your loss assessment coverage could also help pay for your portion of the deductible. Master policy deductible assessments are particularly common in condo associations that opt for higher deductibles, like $25,000.
Is HO-6 condo insurance required?
Residential insurance coverage — whether for home or condo owners — isn’t required by law, but many mortgage lenders will require condo owners to get enough coverage for the structure of the condo to protect their investment.
If your building master policy is bare walls-in, your lender will likely require enough coverage to fully replace the interior structure of the condo in the event that it’s damaged or destroyed. If your building policy has all-in coverage, you’ll likely only need enough condo insurance to cover improvements, alterations, or renovations.