Condo insurance explained: what an HO-6 policy covers

The short version

• Condo insurance, often called an HO-6 policy, covers the inside of your unit and your belongings.
• Your condo association carries a master policy that covers the building and shared areas.
• Your policy also includes personal liability and loss of use coverage.
• Your association bylaws tell you where its coverage stops and yours begins.

Condo insurance is a policy built for the way a condominium is owned. You own the interior of your unit, while the association owns the building structure and the shared spaces. A condo policy, written on what the industry calls an HO-6 form, covers your side of that line: the interior finishes, your personal property, your liability, and the cost of living elsewhere if your unit becomes unlivable after a covered loss.

It is different from a homeowners policy because you are not insuring an entire building. You are insuring the part you own and the risks you carry, while relying on the association master policy for the structure and common areas.

In short: condo insurance covers the interior of your unit, your belongings, and your liability, while the association master policy covers the building itself.

The key to condo insurance is understanding how it fits with the association master policy, because the two are designed to meet in the middle.

A few points make the relationship clear:

• The master policy covers the building. The association insures the structure, the roof, and the shared areas like hallways, elevators, and the grounds.
• Your policy covers the unit interior. Depending on how the master policy is written, that can range from the bare walls inward to the original fixtures and finishes.
• The bylaws set the dividing line. The association governing documents describe what the master policy includes, which tells you what your policy needs to pick up.

Master policies are commonly described as bare walls, single entity, or all in, and each draws the line in a different place. Reading the bylaws, or asking the association, is the way to know how much interior coverage you need to carry.

In short: the master policy covers the building and shared areas, your policy covers the unit interior, and the association bylaws define exactly where one ends and the other begins.

A condo policy is built from a handful of coverage parts that work together.

It generally covers:

• Interior and improvements. Fixtures, cabinetry, flooring, and built-ins inside your unit, to the extent the master policy does not.
• Personal property. Your furniture, clothing, electronics, and other belongings, whether they are in the unit or away from it.
• Personal liability. Claims if someone is injured in your unit or you damage someone else property.
• Loss of use. Added living costs if a covered loss makes your unit temporarily uninhabitable.
• Loss assessment. Your share of certain costs the association charges owners after a loss that exceeds the master policy.

It generally does not cover floods or earthquakes, which need separate policies, or damage the master policy is responsible for. Because the split depends on your building, please contact us to discuss your options and match your coverage to your association bylaws.

In short: condo insurance covers your interior, belongings, liability, added living costs, and loss assessments, but not floods, earthquakes, or losses the master policy handles.

Almost every condo owner needs a policy, and many are required to carry one.

• Lenders usually require it. If you have a mortgage, your lender will typically require a condo policy to protect the interior and your belongings.
• Associations may require it. Many association bylaws require each owner to carry a minimum HO-6 policy so gaps do not fall back on the association.
• Your belongings are yours to insure. The master policy does not cover your personal property, so without your own policy a theft or fire could be a complete loss.

Even where it is not required, the gap between the master policy and your unit is real, and a condo policy is what closes it. Because requirements vary by building and lender, please contact us to discuss your options.

In short: most condo owners need a policy, and lenders and associations often require one, because the master policy does not cover your interior or your belongings.

Choosing condo coverage is mostly a matter of matching your policy to your building and your belongings.

1. Read the master policy. Find out whether it is bare walls, single entity, or all in, so you know how much interior coverage to add.
2. Value your belongings. Take an inventory of your personal property so your coverage reflects what you actually own.
3. Set enough liability. Choose a liability limit that reflects your assets, and consider an umbrella policy if you want more protection.
4. Add loss assessment coverage. This protects you if the association passes a large shared loss on to owners.

Because the right structure depends on your association and your finances, please contact us to discuss your options.

In short: match your interior coverage to the master policy, insure your belongings for their value, set liability to your assets, and include loss assessment coverage.