What is HO-6 insurance?

Condo insurance, also known as HO-6 insurance, provides property and liability coverage specifically designed for condo unit owners. While the condominium complex is managed by the condominium association, a condo unit owner is responsible for their individual unit.

HO-6 insurance is a policy specifically for condos. It is different from HO-3 insurance, which is a standard homeowners insurance policy that provides coverage for the whole structure of a single-family home. Additionally, HO-4 insurance is renters insurance.

So, how does condo insurance work? Your condo is more than a roof over your head; it's your home. It's helpful to understand condo unit owner insurance basics and coverage options for your unit.

What does condo insurance cover?

Condo association insurance policies may not cover all areas of your unit, and some associations may not have a master policy at all. Therefore, you may want to purchase a condo unit owner insurance policy to cover your personal belongings and any building items that are your insurance responsibility. Condo unit coverage would generally extend to all interior fixtures, not just improvements and betterments. To ensure you comply with all requirements and have adequate coverage for your home, consider consulting with a qualified insurance agent early in the purchasing process to review your building's insurance documents and bylaws.

HO-6 policies typically offer several coverage options for condo owners, including:

• Personal property — covers your possessions, such as clothes, furniture and electronics against theft, damage or loss. It usually applies whether your belongings are inside your unit or not.
• Loss of use — if a covered event, like a fire, makes your condo uninhabitable, this reimburses you for the portion of hotel bills, meals, laundry and other living expenses exceeding your normal costs.
• Personal liability — protects you if someone sues you for physical injury or property damage for which you're responsible. Personal liability coverage may also cover defense and court costs.
• Loss assessment — if physical loss to a common area results in damages exceeding the condo master policy’s limit, this coverage can help pay for damages assessed to unit owners, up to the applicable limit of coverage.
• Dwelling — covers damage to your unit’s interior structure from smoke, storms, vandalism or other covered events. You may ask yourself, “How much dwelling coverage do I need for a condo?” It depends on your insurance responsibility under the bylaws of your condo association, but the typical recommendation is to insure your condo at 20% of its total value.

What is not covered by an HO-6 policy?

• Natural disasters — some events like earthquakes and floods are not covered and require a separate policy or endorsement. Talk with your insurance agent about obtaining coverage.
• Intentional injuries to others — liability coverage only applies to accidental injuries. Intentional harm is not covered.
• Certain damage from water — sudden water damage from internal plumbing may be covered by the policy, but damage from underground water or external sewer lines is not. Coverage for water back-ups from sewers or drains may be available for purchase through an endorsement.
• Maintenance concerns — damage from normal wear and tear, deterioration, defects, and mechanical breakdown is not covered.
• Damage from insects and animals — this is not covered as home maintenance can prevent it.

What does a condo association insurance policy cover?

Condo association insurance, also known as a master policy, typically covers the building exteriors and shared spaces of a condominium complex. The extent of the association’s coverage can vary but generally falls into three categories:

• Bare walls-in/studs-out — this basic coverage includes the building's structure (exterior, roofing, framing, piping, wiring) and common areas, while the unit owner would be responsible for the structural elements inside their unit (walls, flooring, fixtures, appliances).
• Single entity — this extends the association’s coverage to include unit items like appliances and fixtures but excludes any upgrades or alterations made by unit owners.
• All-in — this is the most comprehensive option for the association. It covers the building structure, unit items and any additions or improvements made by unit owners.

As a condo owner, you are included as a policyholder on the master policy, and a portion of your condo fees contribute to payment of the policy's premiums. However, this does not satisfy insurance needs for your individual unit.

Is condo insurance required?

Many mortgage lenders require proof of condo insurance coverage before they approve a purchase. If you're in the market for a condo unit, consider contacting an insurance agent to get the process started.

How is condo unit owner insurance price determined?

The price you pay for condo unit owner's insurance, also known as the premium, is influenced by several factors. These include the level of coverage you choose, the deductible amount you're comfortable with (the amount you pay out of pocket before the insurance kicks in) and any applicable discounts or charges. Typically, opting for less coverage and a higher deductible will result in lower premiums. Conversely, more coverage and a lower deductible usually mean higher premiums. To find the right balance for your needs and budget, reach out to a State Farm® insurance agent.