What’s the Difference Between HO-3 and HO-6 Insurance?

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HO-3 policies insure traditional single-family homes, while HO-6 policies insure condos and some townhouses. Buying an HO-3 policy is typically more expensive because it covers the entire house plus other structures, like fences, pools and detached garages. Condo insurance generally only covers the unit itself and not the roof or common areas.

What Is an HO-3 Policy and What Is an HO-6 Policy?

An HO-3 policy is standard homeowners insurance and covers your home for most common perils, including fires, windstorms, theft and vandalism. HO-3 policies contain six types of coverage:

  • Dwelling: Insures your home’s structure, such as the walls and roof.
  • Additional structures: Insures detached garages, fences and other structures on your property.
  • Personal property: Covers your personal belongings, such as electronics, furniture and clothes.
  • Personal liability: Provides financial protection when you’re held liable for another person’s property damages or injuries.
  • Additional living expenses: Pays for daily living expenses, like hotels and meals, if your home is temporarily inaccessible due to a covered loss — your home is being repaired after a fire, for instance.
  • Medical payments: Covers medical bills for other party’s minor injuries sustained inside your home (not always included).

An HO-6 policy — more commonly called condo insurance — provides coverage for your condominium unit and some townhouses. HO-6 policies contain the same types of coverage as HO-3 policies except for some slight distinctions in dwelling coverage (more on this in the next section).

HO-3 vs. HO-6 Home Insurance Policies: What Are the Differences?

There are three key differences between HO-3 and HO-6 policies: the type of property insured, the scope of dwelling coverage and cost.

Category

HO-3

HO-6

Insured Property

Standard or single-family homes

Condo units and some townhomes

Required?

Required by mortgage lender

Required by mortgage lender

Reimbursement

Actual cash value

Actual cash value

Dwelling Coverage

Open peril

Varies 

Personal Property Coverage

Named peril

Named peril

Cost

Typically higher than HO-6

Typically cheaper than HO-3

First, HO-3 policies and HO-6 policies insure different types of properties: HO-3 policies cover traditional single-family homes and HO-6 policies insure condo units and some townhouses.

Second, dwelling insurance in an HO-3 policy has open peril coverage, but it may be open or named peril coverage in an HO-6 policy depending on the company. If named peril coverage is your dwelling insurance’s base protection, condo owners typically have the option to upgrade to “Special Coverage A” for open peril coverage.

Condo insurance generally only insures the structure the owner lives in, which can include their unit’s floors, walls, ceiling and built-in structures.

Condo insurance generally only insures the structure the owner lives in, which can include their unit’s floors, walls, ceiling and built-in structures.

This distinction leads into the third difference: condo insurance is often cheaper than standard homeowners insurance due to lower dwelling coverage requirements. With condos, the roof and sometimes exterior walls are covered by the community — typically paid for collectively via HOA fees. Similarly, condo insurance doesn’t extend to community structures, like gates, fences or swimming pools. If you own a traditional home, you need to buy coverage for all of these.

HO-3 vs. HO-6: Which Costs More?

According to the National Association of Insurance Commissioners, in 2019, the national annual average cost of an HO-3 policy ($1,272) is more than twice the cost of an HO-6 policy ($512).

national annual average costs of ho3 versus ho6 homeowners insurance policy comparison in bar graph chart

Unsurprisingly, condo insurance is often cheaper than homeowners insurance due to the lower dwelling coverage requirements. However, condo owners should also consider that a portion of their HOA dues goes to purchasing coverage for items excluded in an HO-6 policy, such as the roof and common areas.

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Do You Need an HO-3 or an HO-6 Policy?

If you live in a condo or townhouse that belongs to a homeowners association, you will typically need an HO-6 policy. If you live in a single-family home, in which you own the home structure plus the underlying land, you will need an HO-3 policy.

Can You Get an HO-3 Policy on a Townhome or Condo?

HO-3 policies are not available for townhomes or condos that belong to a homeowners association. If you’re living full-time in your townhome or condo, your only coverage option is an HO-6 insurance policy.

One exception is if you rent out your townhome or condo long-term to tenants. In this case, you should consider purchasing a landlord policy. A landlord insurance policy is a type of commercial insurance that replaces condo insurance and provides unique benefits, like business liability — you’re covered if a tenant falls due to a wobbly stair handle, for instance.

How Can an HO-3 Policy Protect Your Townhome or Condo?

While HO-3 policies do not insure condo units, they may insure townhomes that do not share a wall with other units, do not belong to a homeowners association and you own the underlying land. If this is the case, you can purchase an HO-3 policy and it will provide all the same coverage as an HO-6 policy plus protection for other structures, such as fences, detached garages and sheds. Due to this extra coverage, it generally costs more to buy HO-3 insurance than HO-6 insurance.

FAQs

What is the difference between an HO-2 and HO-3 policy?

An HO-2 insurance policy provides named-peril coverage (only listed perils are covered) for your home’s structure, while an HO-3 policy provides open peril coverage (all perils covered except those excluded). HO-3 policies have largely replaced HO-2 policies because they generally don’t meet a mortgage lender’s coverage requirements.

Do you need an HO-3 policy on a townhome if you have an HO-2 policy?

If you already have an HO-2 policy on your townhome, an HO-3 policy is unnecessary unless you want to increase your coverage or your mortgage lender requires you to carry more coverage. HO-3 insurance coverage is wider than HO-2 insurance and usually satisfies a lender’s insurance requirements.

Is an HO-6 required for townhomes and condominiums?

HO-6 insurance is required for townhomes and condos if you have a mortgage on your condo or your HOA requires all condo owners to maintain coverage.

Key Takeaways

  • HO-3 policies are homeowners insurance for traditional single-family homes, while HO-6 policies insure only condo units and some townhouses.
  • HO-6 policies are often cheaper than HO-3 policies due to usually having lower dwelling coverage requirements.
  • An HO-3 insurance policy typically provides open peril coverage for your dwelling, while HO-6 policies can sometimes reduce coverage to a named peril basis depending on the insurer.

Looking for homeowners or condo insurance? SmartFinancial can help match you with a policy that matches your coverage needs and budget. Just enter your zip code below or call 855.214.2291 to receive your free homeowners insurance quotes.

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