Owning a condominium comes with a unique responsibility: condo insurance. Commonly referred to as an HO-6 policy, your mortgage lender and condo association will likely require you to purchase this type of homeowners insurance for condos.
But what exactly does HO-6 condo insurance cover, and how do insurers determine your policy cost? We'll look at the answers, plus how to find the right policy, in this guide.
What Condo Insurance Typically Covers (HO-6 Policies)
Two types of insurance policies apply to condominiums: the condo master policy, which your homeowners association (HOA) oversees, and the HO-6 insurance policy.
Master Policy
The condo master policy may be "bare walls in" or "all in." A bare walls in policy covers the main structure of your building and common spaces. It includes shared areas like the hallways, elevator, and pool. If someone experiences an injury in a common area, the condo master policy will cover their expenses if they file a claim. Condo owners usually contribute to the master policy costs through shared HOA fees.
All in master policies cover the interior and exterior of your property. They include damage to built-in components such as flooring, sinks, and toilets. If your HOA offers an all-in master policy, you'll only need condo insurance for personal belongings and liability protection.
HO-6 Insurance
Standard HO-6 home insurance policies are specific to your unit. They provide financial protection for damage to your condo's interior that's caused by wind, vandalism, fire, and other dangers outlined in the policy.
Condo insurance protects items not included in a bare walls master policy. It extends to personal property, including kitchen appliances, jewelry, and electronics. If a guest suffers an injury while inside your condo, the HO-6 policy can pay your legal expenses if they decide to sue. It can also provide temporary living expenses if you can't stay there because of a covered event.
Some policies include loss assessment coverage. It pays your share of expenses if a claim against the condo master policy exceeds HOA limitations.
Optional Coverage Add-Ons and Common Exclusions
A standard condo insurance policy excludes damage from flood, earthquakes, and general wear and tear. It won't cover damage caused by pests or your intentional acts.
Most insurance companies provide add-on protections for an additional fee. Some optional services that may be worth a second look include:
- Flood Insurance: Useful for those living in areas susceptible to flooding
- Earthquake Insurance: Recommended for condos in high-risk areas
- Water Backup: Covers damage caused by backed-up sewers or drains
- Loss Assessment Coverage: Advisable if your standard HO-6 policy offers limited protection
- Vacation Rental Coverage: Required for condo owners who plan to short-let the property
There's a lot of room for customization in a condo policy, so don't feel like you have to buy the base minimum if you prefer more security.
Factors That Affect Condo Insurance Costs
Whenever you apply for a new HO-6 policy, the insurer creates a risk assessment of the property. Providers use the profile to decide on your condo insurance cost.
Certain aspects contribute to a condo's risk of a claim event, including its location, age, and general condition. Insurers consider whether there's a history of previous claims at the property and whether it's susceptible to natural hazards.
The condo master policy's scope can also influence your HO-6 policy costs. An all in master policy means you may not need as much HO-6 insurance.
When shopping for a new HO-6 policy, compare each provider's terms and conditions along with rates. A condo is a major investment, so you want affordable coverage that fully protects your new property. Shop with multiple insurers to find one that best aligns with your needs. Ask about discounts, too — some providers offer savings you may qualify for.
How Condo Associations Impact What You Need To Insure
Before shopping for a condo house insurance policy, do an in-depth review of the association's master policy. Note whether it's bare walls in or all in, and whether it includes any insurance requirement stipulations. This process can help you determine where the master policy lacks coverage, so make sure to include those items in your HO-6 policy.
You'll have an option to choose between replacement cost or actual cash value for the property you own. Replacement cost is usually the better option because it compensates you for how much it costs to replace an item now. For instance, if you file a claim for a damaged 10-year-old refrigerator, actual cash value may only yield $100 from your insurer. But replacement cost could provide you with enough cash to buy a refrigerator at today's prices.
Get Personalized Condo Insurance Quotes Today
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