What Kind of Insurance Do I Need for My Condo Unit?

Owners of condominium units receive building or structural insurance coverage from the association’s master insurance policy, but there may be many gaps of coverage. The insurance industry has responded to these gaps with the Condo Unit Owner’s Policy, or HO6. If you own a condo unit, you need an HO6 Policy.

Master Policies cover the building; condo units are covered by HO6

Historically, owners of single family homes have purchased “homeowner’s insurance” that is designed to protect against damage to the home, the personal property (contents), and the personal liability of the policyholder. In a condominium association, a “master policy” is purchased by the association that can protect unit owners and mortgagees against damage to the building and the units. Unfortunately, personal property and personal liability coverage are not included for the unit owners.

Personal Liability & Personal Property Covered in HO6

Due to this gap in coverage, insurance companies have created the condo unit owner’s policy. This policy provides a standard level of personal liability protection ($300,000 or $500,000 per occurrence) as well as a limit of personal property protection for the unit owner. Personal property is subjective to every case and limits can be as low as $15,000 and can go as high as need be for the individual owner.

Additional Coverage for Unit Structure Available

Also included in the condo unit owner’s policy is a section of coverage called “dwelling.” This is the area of the policy that can provide the unit owner with additional coverage for the structure of the unit. While the association’s master policy may provide protection to the individual unit, an owner may want to supplement this level of coverage with additional protection on their own policy. This coverage can also be used to absorb the typically larger deductible on the association’s master policy per claim.

Inexpensive & Efficient Way to Cover Yourself

While the primary concern of any owner of real estate is the protection of the structure they own, it is important to understand the other areas of protection that are needed. Condo unit owner policies are a very effective and inexpensive way to fill the gaps of coverage a condo owner will encounter. Often, policies at the minimum level of coverage can be purchased for less than $200 per year.