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What is HO6 Insurance and How Does it Work?

Published February 19, 2021

4 minute read

David Ning

By David Ning

Do you ever wonder why insurance companies invent so many different names for essentially the same thing? Take H06 insurance, for example. It’s sometimes called walls-in coverage. Others just simply call it condo insurance. Whatever you call it, it’s all the same thing. An HO6 insurance policy is basically homeowner’s insurance for condo owners.

Condo insurance is a little different than a standard homeowner’s insurance. Most condos have a master home owners association, with their own insurance. That covers the basic structure of the entire condo building. However, condo owners are responsible for their own unit. Other than that, homeowner’s insurance and HO6 insurance are almost the same thing.

HO6 Insurance Works With a Master Insurance Policy

When you own a condo, there are often common areas. It could be a shared garden or patio. Strictly speaking, those belong to the master HOA. My friend’s condo has a “backyard” that is shared by all the units, but blocked off from the outside. It wouldn’t be right for him (or any other condo owner) to be responsible for this space. That’s exactly why condo insurance is different from homeowner’s insurance, which needs to cover everything that’s within the property line.

When you try to get homeowner’s insurance, you often need to gather what’s known as the “master insurance policy.” That will inform you what the master association’s insurance policy covers. Obviously, whatever you are paying to cover through your association doesn’t need to be covered by you separately.

What Kind of HO6 Insurance You Need

At the bare minimum, the master policy should have bare walls coverage. That covers the whole structure plus most fixtures and furnishings in the common areas. What’s not covered in a “bare walls” policy are interior walls of each individual unit. Some homeowner’s association will get additional coverage called single entity coverage . That covers everything the basic structure, plus fixtures in each unit and everything that’s part of the structure when it was originally built — including interior walls.

Finally, the master insurance policy can have what’s called an all-in coverage. When you pay for all-in coverage through your association, then you are only responsible to cover your personal belongings.

What’s Included In HO6 Insurance?

Much like regular homeowner’s insurance, a condo insurance policy covers dwelling, personal property, personal liability, and loss of use.

Dwelling Coverage

Dwelling coverage is the part that works alongside your master’s insurance policy coverage. You’ll want to figure out what the master policy covers. Then only add enough to cover what’s left over. In the case of the master policy having all-in coverage, you may not even need any dwelling coverage.

Personal Property

Personal property covers everything that you own. Mattress, furniture, handbags, gaming consoles. You name it, they can cover it. This part of HO6 insurance is similar to renter’s insurance, in that it covers your personal belongings only. The building itself might be covered by the master policy.

Personal Liability

Personal liability will cover your costs if you are ever sued for damages that relate to your property. Just like homeowner’s insurance, most condo insurance will even cover your dog accidentally biting a neighbor. If you have Ho6 insurance, make sure you understand exactly what your specific policy covers. You don’t want to accidently over insure yourself by having two or more policies covering the same accidents.

You’ll also be happy to know that personal liability coverage also covers legal fees. If you are ever sued for an alleged injury or damage, your insurance company will pay a competent legal professional to defend you. (And their own financial interests, of course.)

Most condo insurance carries a personal liability coverage of a minimum of $100,000. You can only increase it, though. The typical maximum is only $500,000 per policy. That might sound like a lot, but we as Americans are uniquely litigious. That’s why some people go above and beyond with condo insurance. You can also get an umbrella insurance policy to get even more liability coverage.

Loss of Use

Lastly, loss of use coverage pays you for expenses incurred while you aren’t able to live in your home. It would be things like hotel costs, if you were displaced from you home for any reason. It would cover other not-so-obvious expenses too, like temporary boarding for your pet or extra fuel costs if you commute was suddenly increased. The policy will even cover extra food costs, since you can’t cook at your home anymore. You may need to eat out for three meals a day, which all adds up quickly.

Loss of use coverage is usually limited to a percentage of the dwelling overall coverage. It’s typically in the 20%-to-30% range. It’s kept low to prevent claimants from going crazy with accommodation and food costs claims. For example, a $300,000 dwelling coverage with a 20% limit means that you can only claim up to a maximum of $60,000 in any one accident.

For Example…

That might sound like it’s way more than enough. However, many people think it’s a blank check to score fancy meals and luxury hotel suites. That’s not always the case though. A few years ago, one of my friends had their toilet back up on them in their home. It turned out to be a huge disaster. It flooded the whole second floor and caused water damage throughout the whole house.

Luckily, they had proper insurance. However, the repair process was extensive and ended up taking months to complete. They had to file the claim, have an assessor come out to assess the damage, then wait for the insurance company to determine that the disaster is covered. Finally, they had to arrange for the repair to be made. The whole process took eight months. You can imagine that eight months of hotel living and dining out can burn through $60,000 pretty quickly.

The Bottom Line

HO-6 insurance is essentially homeowner’s insurance for condos. Almost everything you read about homeowner’s insurance will apply. The only thing you really have to be mindful of it to make sure you understand what’s already covered through the master association’s policy. You can’t want to be paying double for the same coverage.

Condo-HO6-Insurance

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David Ning

Experienced Finance Writer

David is a published author, entrepreneur and a proud dad. He firmly believes that anyone can build a solid financial foundation as long as they are willing to learn. He runs MoneyNing.com, where he discusses every day money issues to encourage the masses to think about their finances more often.

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