H0-6 Policy: Condo Insurance & Coverage Breakdown

If you own a condo unit, you need a special type of homeowners insurance to protect your personal property and the value of any improvements made to the interior. Learn more about HO-6 insurance and find out why it’s essential for condo owners.

What Is an HO-6 Policy?

An HO-6 policy, also known as condo insurance, is a special type of homeowners insurance designed specifically for people who own condo units. When you own a single-family home, you’re responsible for the structure of the building and its contents. Condo complexes are a little different.

The condo association usually insures the structure of the building, leaving residents to insure the interior ^[1]. Therefore, an HO-6 policy typically covers things that aren’t covered by a condo association’s master policy.

Property and casualty insurance expert Kristopher Kane points out that many condo owners may be unaware of this aspect of HO-6 insurance.

Expert Take

Condo insurance is a must-have. It covers both your personal possessions and the interior structure of your unit, from kitchen appliances to carpeting to furnishings and possessions. A condo association’s insurance doesn’t typically cover these things. In the event of something like a fire, even once the building is repaired, everything but the interior shell of your unit and everything that was in it will still need to be repaired or replaced.

Kristopher Kane – Full-time Freelance Writer

How Does HO-6 Insurance Work?

HO-6 insurance rolls five types of coverage into a single policy: dwelling, liability, personal property, loss of use, and loss assessment.

Dwelling

Your dwelling coverage pays to repair or replace damage to the interior structure of your condo unit. For example, if a covered loss damages your drywall, the dwelling portion of your HO-6 policy would cover the cost of repairing it. HO-6 insurance doesn’t cover the exterior structure ^[2].

Liability

If someone injures themselves while visiting your condo or if you somehow cause damage to another person’s property, the liability portion of your HO-6 policy covers the cost of any resulting lawsuits. It may also cover medical bills for injured guests.

Personal Property

The term “personal property” describes the belongings inside your condo. This includes electronics, furniture, and books — as well as many other types of items. If your personal property sustains damage due to a covered event, your HO-6 policy should pay to repair or replace it.

Loss of Use

If the damage to your condo is so bad that you can’t live there while it’s being repaired, your HO-6 policy will also cover additional living expenses. Note that your insurer will only pay the difference between what you’re spending now and what you usually spend. If you normally spend $100 per week on groceries and now you’re spending $300 per week on takeout, your insurer may reimburse you for the $200 difference.

Loss Assessment

A covered event might damage shared areas of a condo complex, such as clubhouses or stairwells. If the loss exceeds the limits of your condo association’s master policy, you and the other residents may have to cover the remaining balance.

Loss assessment insurance helps cover your portion of a shared loss. Note that your HO-6 policy may have a low loss assessment limit. However, it’s possible to purchase an endorsement to increase your coverage.

Coverage and Limitations

Every HO-6 policy has a coverage limit, which is the maximum amount of money an insurer is willing to pay if a covered loss occurs. Each type of coverage has a different limit. For example, your dwelling coverage usually has the highest limit. Loss assessment insurance may have a limit as low as $1,000. Pay close attention to these limits when securing insurance for your condo.

Covered Perils

HO-6 insurance only covers named perils, which are specific types of damage listed in your insurance policy. If a peril isn’t listed in your HO-6 policy, it’s not covered. HO-6 insurance typically covers the following named perils:

• Fire/lightning
• Windstorms/hailstorms
• Riots/civil commotions
• Explosions
• Damage from aircraft
• Damage from vehicles
• Smoke
• Theft
• Falling objects
• Freezing
• Cracking or bulging
• Volcanic eruption
• Water damage (excludes flooding)
• Vandalism
• Damage caused by the weight of ice and snow
• Damage caused by power surges

Limitations and Exclusions

Insurance companies typically don’t pay for damage caused by a lack of maintenance. For example, if you notice that the interior structure of your condo is damaged, yet you do nothing to address the problem, your HO-6 policy may not pay for repairs if a covered peril causes additional damage.

The same principle applies to normal wear and tear. Your HO-6 policy won’t pay for repairs if something breaks simply because it’s reached the end of its useful life.

HO-6 insurance generally doesn’t cover damage caused by earth movements or flooding. Earth movements include earthquakes, mudslides, and sinkholes. If you’re concerned about the potential for flooding in your neighborhood, consider purchasing a supplementary flood insurance policy. You may also be able to add an earthquake endorsement to your existing policy or purchase a separate earthquake supplement.

If you’re not sure what type of coverage you need, work with a licensed insurance professional to customize your HO-6 policy.

How Much Does HO-6 Insurance Cost?

At the end of 2023, condo insurance will cost an average of $512 per year ^[3]. This is the average for the United States, so your costs may be much higher or lower. Insurance companies typically base your premium on the following factors:

• Age of the condo: A brand-new condo is less likely to need repairs than a condo built 20 years ago, so it typically costs less to insure a newer unit.
• Your credit history: Many insurers check your credit-based insurance score to determine if you’re likely to file a claim ^[4]. If your score is on the low side, your insurance company may charge you more for condo insurance.
• Your claims history: The Comprehensive Loss Underwriting Exchange (CLUE) maintains a database of auto and homeowners insurance claims. Your insurance company may pull your CLUE report to find out if you’ve filed any claims within the past 7 years ^[5]. If you have, you may have to pay more for your HO-6 policy.
• Location: If your condo sustains damage, the cost of repairing it depends on the average cost of materials and labor in your area. Some areas have higher average costs than others. Insurers account for these variations when calculating HO-6 premiums. Your location also has a big impact on your ability to get emergency assistance in the event of a fire. If you live 1 mile from a fire station, you may pay a little less than someone who lives 10 miles away.
• Coverage limits: The more coverage you have, the more it costs to maintain a policy. For example, someone with $100,000 in dwelling coverage is likely to pay less than someone with $250,000 in dwelling coverage, assuming everything else is the same.
• Deductible: Your deductible is the amount of money you have to pay for repairs before your insurance company starts contributing. For example, if you have a deductible of $2,500 and a claim valued at $7,500, you must pay the first $2,500 in repair costs. Then, your insurance company will cover the $5,000 balance, assuming your claim is approved.
• Discounts: You may qualify for a policy discount based on your employment status, claims history, or loyalty to your insurance company. Bundle discounts are also popular, so consider purchasing home and auto insurance from the same insurer.

Finding the Right Condo Insurance

A condo is a big investment, so it’s important to have the right insurance in place. If you need help putting together an HO-6 policy, speak with a licensed insurance professional.

“Condo insurance, like most forms of residential coverage, is essential,” said Kane.

Expert Take

HO-6 insurance picks up where your condo association’s policy leaves off, providing coverage for your belongings and the interior of your unit. It’s usually more affordable than homeowner’s insurance for free-standing dwellings, and it’s definitely worth the peace of mind knowing that your personal possessions and the space you call home are covered. It’s a small expense for the protection it offers.

Kristopher Kane – Full-time Freelance Writer

---

Reviewed by Kristopher Kane

Kristopher Kane is a career freelance writer with over 15 years of experience and a broad portfolio encompassing various topics within the insurance industry. He has written for both B2B communication and consumer-level customer engagement.