Definition and Examples of HO-6 Insurance

Also referred to as condo insurance, HO-6 insurance is a type of homeowners policy that can cover a wide range of damages and expenses relating to your condominium, co-op, or townhouse—as opposed to the shared areas of the condominium complex.

• Alternate name: Condo insurance

Policy details vary, but they generally cover some or all of the following to a degree:

• The dwelling, its fixtures, and any improvements
• Personal property and belongings within the unit, such as clothing, furniture, and electronics
• Living expenses if you have to move out while your condo is being repaired or rebuilt due to a covered loss
• Legal fees and medical costs for accidents that happen in your unit

The most comprehensive plans include all of these coverages, but there’s no guarantee all policies do. Additionally, like many types of insurance, HO-6 policies have reimbursement limits. These policies also exclude coverage for certain types of incidents, such as damage from flooding and termites. However, if your unit is burglarized, for example, your HO-6 policy will likely cover the cost of your stolen items.

How Does HO-6 Insurance Work?

HO-6 insurance is different from your homeowner association’s (HOA) master insurance policy, which usually covers the common areas, the structure of the building itself, and occasionally, the basic structure of your unit. An HO-6 policy will cover your personal belongings, any fixtures or improvements, accidents that may occur in your unit, or your living expenses should you have to move out while your home is being repaired.

If you experience a covered loss, you’ll file a claim with your HO-6 insurance company, and possibly with your HOA’s insurance company. For instance, if items inside your unit are destroyed by a kitchen fire, you’ll probably only need to file a claim with your insurer. However, if the fire started in a hallway and spread to your unit, you’ll likely have to get your HOA’s insurance company involved, too.

You may have to pay a deductible before your insurance company kicks in and covers the rest. Your deductible and coverage limits are usually listed on your condo insurance policy declarations page. When in doubt, contact your insurance agent. They’re often more than willing to help you with the claims process.

HO-6 Insurance vs. HOA Insurance

Essentially, HO-6 insurance covers your unit from the walls in, while an HOA master policy covers the physical structure of the building and any common areas. While some HOA master insurance policies provide more comprehensive protection, an HO-6 policy can help fill the gaps by making sure the inside of your unit and personal belongings are covered, too.1

The type of HO-6 coverage you’ll need depends on the value of your belongings and the level of coverage provided by your HOA’s master policy. In general, HOA insurance has three levels:2

• Bare-walls coverage: These policies insure the building’s common areas, including property owned by the HOA. It doesn’t extend to the internal structure or fixtures of your unit.
• Single-entity coverage: These policies cover the same elements as bare-walls coverage, plus your condo’s structure and fixtures from when it was originally built (not improvements or upgrades).
• All-in coverage: This is the most comprehensive type of coverage, and it includes single-entity coverage, plus some or all of the improvements to your structure and fixtures.

Whatever the terms of your complex’s master policy, you probably should still buy an HO-6 policy to financially protect one of your most important assets—your home—against unforeseen disasters and accidents. Even if your HOA has all-in coverage, you’ll still need protection for your personal belongings and liability.

What Does HO-6 Insurance Cover?

HO-6 insurance makes up for your HOA master policy’s lack of coverage on your personal items. It may cover any or all of the following:

• Building property coverage for damage to your unit: You might get help replacing your cabinetry and appliances if they are damaged in a covered incident.
• Personal possessions: Insurers may pay to repair or replace your electronics or clothes if they’re damaged or stolen.
• Lawsuits against you (including any medical costs): If a guest injures themselves on your property, your insurance might help cover your legal fees and the guest’s hospital bills.
• Additional living expenses for loss of use (and loss assessment): This might cover your food and lodging if your unit is uninhabitable.

HO-6 insurance is typically what’s known as a “named perils” policy. That means coverage for your dwelling and personal property only kicks in for incidents or accidents listed in the policy, also known as perils. HO-6 insurance policies often include the following 16 events:3

1. Fire or lightning
2. Windstorm or hail
3. Explosion
4. Riot or civil commotion
5. Damage caused by aircraft
6. Damage caused by vehicles
7. Smoke
8. Vandalism or malicious mischief
9. Theft
10. Volcanic eruption
11. Falling objects
12. Weight of ice, snow, or sleet
13. Accidental discharge or overflow of water or steam
14. Sudden and accidental tearing apart, cracking, burning or bulging of specific household systems
15. Freezing
16. Sudden and accidental damage from an artificially generated electrical current

Do I Need HO-6 Insurance?

If you purchase a condo, your homeowners association or your mortgage lender (if you use one) may require you to purchase an HO-6 insurance policy. They may also have minimum coverage requirements.

Even if you own your condo free and clear, or your HOA doesn’t require you to get HO-6 insurance, you may want to consider getting a policy anyway.

After all, your condo is likely one of the most valuable assets you own. And if it’s your primary residence, you’ll likely keep most (if not all) of your personal possessions on the premises. However unlikely it may be, the potential downside of losing everything you own in one fell swoop due to a catastrophe, such as an electrical fire, is too important to leave to chance.

Besides, HO-6 insurance is relatively affordable. The nationwide average annual HO-6 premium is $506, or about $42 per month.4 That’s a small price to pay for the peace of mind of knowing your home and belongings are protected.