What is condo (HO-6) insurance and what does it cover?

Condominiums are great options for people who want to own their own home but not deal with everything that comes with a full house. Inside, condos are like any house, a full living space, which the owners are free to do with as they please. But outside those walls, everything else is managed by the condo association or homeowners association. It’s a living situation that can simplify many parts of being a homeowner. However, if you’re unfamiliar with life in a condo, you might have questions about basic things most people take for granted. For example, how does condo insurance work?

Condo insurance, otherwise known as an HO-6 policy, operates similar to how owning the condo does. What’s inside your walls is covered, what’s outside is not.¹ That’s a simplification, of course, so let’s get into the specifics of what condo insurance coverage is and what it protects.

What does condo insurance cover?

HO-6 condo insurance covers most of the things you would expect to be covered in a home, as long as they live within the walls of the condo. That typically includes:

• Building property – this includes the unit itself and the things attached to it such as walls and fixtures.
• Personal property – this includes furniture, electronics, and any other movable items inside the unit.
• Personal liability – this covers any legal expenses from claims and lawsuits made against you.
• Loss of use – this covers the cost of lodging and transportation if the unit becomes uninhabitable.¹

Different types of condo insurance

Dwelling

Dwelling insurance pays to replace the structural part of the unit that you are responsible for if a disaster, such as a fire, destroys it. This usually includes everything you are responsible for within the walls of your unit: paint, flooring, cabinetry, etc. Some of this may also be paid for by your HOA’s master policy if it’s an all-in policy.²

Liability

Liability coverage protects you from the legal costs of personal injury or property damage lawsuits. This coverage is a core component of any H-O6 insurance policy. Most policies will provide for at least $100,000 in coverage, although the policyholder can always choose to purchase more.

Loss of use

If your condo becomes uninhabitable because of damage or some other issue, loss of use coverage may pay for your travel and other expenses incurred so you can maintain your usual standard of living.

Personal property

HO-6 coverage also includes personal property coverage, which protects the property in the condo. This may include clothing, furniture, valuables, and electronics, among other things.¹

Individual condo policy vs master condo policy

The amount of coverage required for an individual condo owner is highly dependent on the extent of the condo association’s or HOA’s master policy. Generally, the master policy covers public spaces within a condo complex such as lobbies, elevators, parking lots, pools, and other shared amenities. Policies that stop there are called “bare walls coverage”; they cover the structure of the condo and the shared spaces.

But some master policies go beyond structure and shared space. “Single entity coverage” has everything included in bare walls but also covers built-in property like fixtures inside the unit.

“All-in coverage” is the most comprehensive of all, with coverage that extends to condo improvements and additions. If it’s not covered in the master policy, you’ll probably have to cover it in your condo policy.¹

It’s important to remember that the master policy is paid for by residents’ dues, so when costs exceed the amount a master policy covers, residents foot the bill for that, too. As a condo owner, you can add loss assessment coverage to your condo insurance policy to help pay your share of the difference in these circumstances.

Is condo insurance required?

Are all these kinds of condo insurance coverage necessary? That depends on your point of view, but the point of view that matters most is usually your mortgage lender or HOA. Any lender is typically going to require that you purchase insurance for your unit while the loan is active. Already have your condo paid off? You’ll probably still need insurance. Many HOA’s require residents to be covered.³

In any case, your agent should be able to help you assess what type of coverage is best for your situation.

Even if your condo is paid off, and your HOA or condo association does not require it, insuring your condo is always the smart choice. Get a free quote from Nationwide today learn how condo insurance can better protect you and the things you care about.