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HO6 Homeowners Insurance Protects Condominiums

By Mike Heuer

While living in a condo means paying for homeowner association (HOA) fees, including HOA insurance, those costs do not provide insurance coverage for the condominium, its contents or personal belongings. It only helps cover liability and other insurance coverages for the commons areas and the HOA itself. Buying insurance protection for a condo means buying an HO6 condominium insurance plan.

Condominium insurance is not sold in every state. In states in which HO6 homeowners insurance plans are sold for condos, it helps to check the master insurance policy for the HOA to avoid buying potentially overlapping coverage with a condo policy. A master condo insurance policy essentially covers all owners of condominiums for their collective liability for commons areas. While the condo owners only own the actual condominiums in which they live, for legal and insurance purposes, they each have a collective responsibility for commons areas, such as the grounds, pool areas and exterior walls.

There essentially are two kinds of master insurance policies. One is for the bare walls and inward, which covers all real property from the exterior on into the building itself, including entryways, stairs and other commons areas. But countertops, fixtures and other property located within the owned unit is not covered by such a master policy. People whose HOAs have such a plan are most in need of comprehensive property insurance.

The other type of master policy is an all-in policy, which insures fixtures, additions and installations within the interior of the building’s walls as well as the floors and ceilings of individual condo units. People whose HOAs have such a policy in place are less in need of comprehensive property insurance protection.

Either type of master policy also likely would have a deductible, and a condo owner would be wise to have additional insurance coverage to protect against potential partial financial liability for paying a deductible. Once a condominium owner knows which type of master insurance plan is in place, he or she can purchase the proper HO6 policy to protect what is not covered by the master insurance policy.

Choosing the right coverage involves the usual choice between actual cash value protection or replacement cost insurance coverage. Insurance experts suggest learning what other unit owners within a condominium might pay for various upgrades, such as to countertops and fixtures, and use that as a base for what it might cost to fix or replace similar items inside the owned unit.

Assessing the value of the contents and personal belongings kept within the unit also is an important step and can help determine if replacement cost coverage or actual cash value would be needed. As always, replacement cost coverage is the more expensive option but could be important for ensuring the value of rare items, such as antiques and artwork, will be fully protected.

Various property and casualty insurers will offer different types of HO6 insurance policies to ensure condominium owners and the units themselves have sufficient protection as determined by the policyholder. When properly protected, a condo owner can be certain he or she won’t suffer a great financial loss if the unit or building is damaged or destroyed by covered perils.