If you own a condo or are looking to purchase one, you probably know that some of the big selling points are less maintenance and less cost than a detached home. Since you’re only the owner of a single unit out of multiple, things like damage to the exterior siding from a big storm, would be covered under the condo association’s master insurance policy instead of your personal one. However, there are still several reasons you want to pursue your own insurance coverage in the form of a HO6 policy.
Why do you need a HO6 Policy?
Often referred to as “walls-in coverage”, a HO6 is a homeowner’s policy specially designed for a condo owner. Several years ago, having a HO6 policy was completely optional. Now, several lenders now require it in order for a buyer to receive a loan on a condo. In addition to funding, here are the top five reasons you should opt for coverage anyway:
1. Protection for the Interior
No one wants to think about a small disaster inside their unit, like a kitchen fire or a bathtub overflow all over your brand new hardwoods, but stuff happens. It’s better to plan for how you’re going to pay for it now than when you’re traumatized later. While most of the damage to the interior of your unit would not be covered by the association’s policy, you would be covered if you obtained a HO6 policy.
You’ll want to tailor your HO6 policy to work with the master policy. You should review, or hire a professional to review, the master policy documents. You’ll want to determine what exactly is included and what you are responsible for covering.
2. Personal Liability
Imagine your cute, fuzzy Fido, accidentally biting the creepy neighbor next door while he was in your condo delivering fresh baked cookies or your boyfriend tripping over your Louboutin’s and breaking an ankle in your living room. It’s not fun to picture, and you definitely can’t afford to pay for their medical bills (unless you sell the shoes), but you don’t have to if you have HO6 insurance coverage. It will cover your liability for accidents and injuries that occur on the premises. Beyond accidents, this could even extend to slander and libel against others.
3. Covers Your Stuff
If your personal belongings are damaged or stolen, you’re stuck paying to replace them out of pocket if you don’t have insurance coverage. It could be financially devastating unless you just have money to lose. A HO6 policy is typically going to provide basic coverage for your personal effects. You may need to even increase that limit depending on how much stuff you own and it’s replacement value. Depending on your policy, this could also extend outside of your actual condo. If you’re bike is stolen off the street, you could have coverage for that too.
If you have expensive jewelry, paintings, or any other high value items, you’ll want to check with your HO6 provider to find out the limits on your policy. Many times you’ll need an add-on to specifically cover engagement rings or other specialty items.
4. Cover Loss Assessment
As a condo owner, you could be responsible, along with all the other unit owners, for a shared loss. For example, a hurricane wipes out the Coconut Cabana at the pool along with damages to other things around the common ground. The amount of damage exceeds that set aside by your association for repairs and loss. They could assess each unit number a dollar amount to cover the cost of the damages.
5. It’s Affordable
Condo insurance cost varies, but compared to homeowner’s insurance, it’s typically more affordable. Costs will depend on what your HO6 needs to cover. If you need more than standard coverage for interior fixtures, expensive jewelry, or extended coverage, the more expensive it can get. Having the basic coverage for a small monthly fee is much better than carrying no insurance coverage at all.
Things a HO6 Doesn’t Cover
The standard HO6 policy does have some limitations on what is covered. If you need coverage for flood, earthquake, or your condo is vacant, you need to talk to your insurance agent about what additional coverages you may need to add to your policy. The same goes with a condo that is currently being rented on a regular or seasonal basis. Don’t wait until a loss to claim you didn’t know; it’s important to know the limitations of your policy now and get the right coverage.