HO-6 covers a condominium unit-owner who wishes to insure items not covered by the association policy, as well as the personal property inside the unit and personal liability protection.
Many condominium owners think that since the association owners have purchased insurance (master policy) on the association, they don’t need insurance to protect their homes.
Condominium associations must carry property insurance that covers the common items such as floors, walls, ceilings. Most condos have a liability policy that covers claims on the common grounds such as someone falling on a common walkway. These insurance policies are also known as a master policy (“MP”).
MP’s do not cover all events and property. (1) The MP does not cover personal property within a unit. If there is a fire, the MP will not cover personal property loss in a unit. (2) The MP does not cover owners for liability claims inside a unit. If someone slips within your unit, your MP does not cover you or your guests if you are sued. (3) Some MP only cover the common elements (walls, ceiling, floors) and not items such as the stove, kitchen, cabinets…. (4) Most MP do not cover improvements inside a unit. If an owner completes extensive renovations and improvements, it is typical the MP will not cover these in event of a loss. Some MP will restore the unit in its original condition when it was first built.
Lenders are now requiring HO6 policies on all condominium purchase and refinance transactions if the MP does not cover for the loss in the interior improvements. The HO6 policy is purchased by an owner of a unit to cover these issues. The premiums are inexpensive, typically $150—$350 annually, and the deductibles are low. Some HO6 can also cover assessments by the Association for rebuilding if there are insufficient funds to cover in the MP. The HO6 will pay to defend you if someone is injured in your unit.