What Is an HO-6 Condo Insurance Policy: What Does It Cover?

An HO-6 insurance policy provides property insurance for condos, co-ops and townhouses. The coverages in a standard HO-6 policy include protection for your unit's interior structure; unit improvements and alterations; your personal property; additional living expenses, if your home becomes uninhabitable; medical bills, if a guest is injured; and certain legal costs. If you take out a mortgage on your condo, your lender will require you to purchase an HO-6 policy.

What Does HO-6 Insurance Cover?

If you are thinking of purchasing a condo, a co-op or a townhouse, you can craft an HO-6 policy that works for you, choosing only the insurance products and policy limits you want. Your HO-6 policy should cover what's not covered by your condo association's master insurance policy, for which you must pay HOA fees.

An HO-6 policy is one of eight types of homeowners insurance policies:

Policy	Description
HO-1	The most basic homeowners insurance policy that offers the least amount of coverage. No personal belongings or liability coverage is included. Covers 10 perils.
HO-2	Named-peril policy that provides more coverage than an HO-1 policy, but less than an HO-3 policy. Covers 16 perils.
HO-3	Open-peril policy that offers broader coverage than HO-1 and HO-2 policies. Commonly used by homeowners and accepted by mortgage lenders.
HO-4	Insurance policy for renters (e.g., apartments, single rooms).
HO-5	The most comprehensive form of homeowners insurance.
HO-6	Insurance policy for condo owners.
HO-7	Insurance policy for those who live in mobile homes.
HO-8	Insurance policy for older and historic homes.

Here are the basic coverages in an HO-6 policy.

Dwelling Coverage

Also called building property coverage, dwelling coverage in an HO-6 policy pays to rebuild your condo's interior after a loss event. HO-6 policies are often walls-in; some policies include exteriors and other structures.

HO-6 policies cover condos, co-ops and townhouses.

If your floors, walls or ceilings are damaged by fire and smoke, your dwelling coverage will help pay for the materials and labor it takes to fix it. You will be on the hook for any expenses after your building property coverage reaches its maximum coverage limit.

Here are some commonly named perils in a typical HO-6 dwelling coverage policy:

• Accidental discharge of steam or water
• Aircraft
• Explosions
• Falling objects
• Fire and lightning
• Vandalism and riots
• Smoke
• Theft
• Weight of ice, sleet or snow
• Vandalism and riots
• Vehicles
• Volcanic eruptions
• Wind and hail

Actual Cash Value vs Replacement Cost Value

Decide if you want to insure your dwelling for its actual cash value—that is, it's depreciated market value before the loss event—or opt for replacement cost coverage, which is the cost to rebuild your condo as it was, despite your condo's depreciation and the market's inflation.

Replacement cost value is more expensive but offers superior coverage. If a repair costs more than your deductible, you should not file that claim.

Personal Property Coverage

Condo insurance coverage for personal property insurance is just like homeowners insurance for personal property: it pays to repair or replace your personal property after a named peril, whether your personal property is damaged, destroyed or stolen.

Personal property coverage extends to all your belongings, including your clothing, jewelry, rugs, furniture, sports equipment, computers, other electronics and so on. It also covers items that were stolen from or damaged in an off-site storage unit.

Personal property coverage is usually calculated as a percentage (up to 75% of of your dwelling coverage limit) so make sure you have adequate dwelling coverage and find out what the breakdown is in your policy.

Just as with dwelling insurance, you'll have to decide if you want your personal property to be covered for its actual cash value or replacement cost value. If you have particularly expensive jewelry or other high-ticket personal belongings, you can always buy additional coverage, also called an "endorsement" or a "rider," to cover the full value of those special items.

Create a Home Inventory of Personal Property

Create a home inventory with receipts, professional appraisals, pictures, video and other documentation of your personal property. A home inventory will not only help you to decide how much HO-6 coverage you need, but it will also expedite the HO-6 insurance claims process and make sure you get a fair settlement on your personal property.

Additional Living Expenses Coverage

If a major covered loss makes your condo uninhabitable, you'll have to live somewhere else during your condo's reconstruction. Also called loss-of-use coverage, additional living expense coverage (ALE) helps to pay for bills that are over and above your normal, day-to-day expenses before the loss event.

Loss-of-use coverage will pay for a hotel room, but it won't pay your monthly mortgage payment or your homeowners association (HOA) fees. Your insurance company will give you a worksheet to work out your temporary living expenses before and after the loss event. Most home insurance coverage will pay you the difference between the two.

Personal Liability Coverage

If your guest is injured falling down the stairs of your condo building, the condo association master policy will cover your guest's injuries, lost wages and, for example, pain and suffering. However, if your guest is injured while within the walls of your condo due to your own negligence, your personal liability coverage steps in.

Personal liability coverage also pays for any damage to a guest's property as well as your legal fees, including lawyer fees, court costs and other legal expenses. Finally, the policyholder's personal health insurance, not the policyholder's liability insurance, pays for the policyholder's and their family members' injuries.

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How Much Does Condo Insurance Cost?

In the U.S., the average condo insurance cost for HO6 insurance is about $500 a year, or about $40 a month, on average. In some parts of the country, insurance companies charge as little as as $30 a month and as much as $80 a month for condo HO6 insurance, but condo insurance rates are affected by many factors.

In the U.S., condo insurance costs about $500 a year, on average.

Based on the National Association of Insurance Commissioners' 2019 Homeowners Insurance Report, Forbes Advisor reports the following averages for condo insurance rates and their average insurance-policy liability limits:

Avg. Condo Insurance Premium per Year	Dwelling Coverage Amount
$367	$13,999 and under
$351	$14,000 to $19,999
$424	$20,000 to $25,999
$387	$26,000 to $31,999
$389	$32,000 to $37,999
$415	$38,000 to $43,999
$402	$44,000 to $49,999
$459	$50,000 to $74,999
$521	$75,000 to $99,999
$837	$100,000 and over

So, if you pay $367 a month for your condo insurance policy, your policy will pay for damages to your condo's interior up to about $14,000. According to these figures, however, you can get a whopping $100,000 worth of coverage for only about $70 a month, a small price to pay for protection against a catastrophic event that could cost thousands of dollars—thousands of dollars you would have to pay out of pocket if you didn't have condo insurance.

How Much Condo Insurance Should I Buy?

Your condo insurance cost largely depends upon the value of your home and your HOA's level of coverage. According to the International Risk Management Institute (IRMI), condo HO6 insurance should be prepared for these common costs:

Unit Owner Structural Responsibility Items	Replacement Cost Installed
Carpeting, hardwood floors, ceramic tile, or any other flooring	$25,000
Wall coverings	$5,000
Lighting fixtures	$5,000
Plumbing fixtures (e.g., toilets, tubs, etc.)	$12,000
Built-in appliances	$5,000
Kitchen cabinets	$20,000
Unit owner installed improvements (e.g., screened-in or four-season porch)	$30,000
Any other improvements made to the unit by all previous owners (usually very difficult to determine, especially for an older unit with several previous owners)	$20,000
Total Replacement Cost Installed	$122,000

Other Condo Insurance Products

A condo policy does not include flood or earthquake coverage, but you can buy these policies to protect yourself. Your condo insurance policy will also not pay for damage to the condo's exterior or roof, but your HOA should. Here are some other products that savvy condo insurance customers purchase:

Loss Assessment Coverage

A loss assessment is "a property owner's share of a loss to property owned in common by all members of a property owners association," according to the IRMI. When your condo association's master plan falls short of a liability, property damage or medical expenses claim, the association may require its condo owners to pony up money to pay the deductible to help defray costs. The "assessment" is figuring out how much each condo owner should pay.

Loss assessment insurance does not cover improvements. Another thing to keep in mind is that loss assessment only applies to the perils named in your condo insurance policy. So, if you don't have flood coverage, your loss assessment insurance will not cover that case.

A part of most condo insurance policies, loss assessment coverage commonly provides a maximum payout of $1,000. Some experts recommend acquiring at least $5,000 in loss assessment coverage. If you want a maximum payout that's higher than your policy's limit, you'll have to get an endorsement for that additional loss assessment coverage.

Medical Payments Coverage

If a guest suffers an injury in your condo and your negligence is deemed to be the cause of that injury, your personal liability coverage will pay for your guest's medical expenses. Medical payments liability coverage is designed to pay for small medical claims, up to $5000. Medical payments coverage only applies to your guests' injuries; your own personal health insurance pays for yours.

Sewer Backup Coverage

According to the Insurance Information Institute, another coverage you should consider but that is not included in a standard policy is sewer backup coverage. You can get about $10,000 worth of sewer line coverage for as a little as $30 a year or as high as $10 month.

The Homeowners Association Master Policy

Your HO-6 should complement your condo association master policy. Most condo association master policies cover any property damage or bodily injury liability that occurs in the property's common areas and outside the walls of the individual units.

Your condo policy and your HOA's master policy should dovetail, not overlap.

Master policies vary, so review your HOA master policy to your insurance agent to see what coverage you need to buy.

There are three basic HOA master policies:

Bare-Walls Coverage

A bare-walls coverage means that individual condo unit owners are responsible for insuring their unit from the sheetrock or wall studs in. This includes walls, sinks, cabinets, appliances, flooring and wallpaper. Owners also must insure any renovations and improvements they make.

Single Entity Coverage

In this type of coverage, the condo association master insurance policy provides protection for nearly everything in the complex, including your unit and the fixtures inside it. Condo unit owners are only responsible for insuring their personal possessions. However, any upgrades that you make to your unit are not covered in the event of a loss.

All-Inclusive Agreement

An all-inclusive policy covers any improvements, upgrades and additions you make in the unit. For the condo owner and condo insurance providers, this all-in coverage constitutes the most comprehensive form of coverage.

Buying the Right HO-6 Condo Insurance Policy

A typical condo insurance policy is much like a standard homeowners insurance policy, except you're generally only covered for repairs walls-in. You will also have an HOA fee, which should cover you for maintenance and repairs to common areas and exteriors. Buying adequate coverage with high-enough limits is important, and so is crafting a policy that covers what your condo association's master policy doesn't.

SmartFinancial's rate tool can sort through all the condo policies from the top insurance companies in your area. You'll then be matched an insurance agent who can help you customize your HO-6 policy. For free, real-time quotes, condo owners and soon-to-be condo owners should enter their zip code below or call 855-214-2291.