What to Expect from an HO6 Policy
If you are planning to purchase a condo, you will likely also purchase an HO6 policy. The typical insurance policy purchased by condo owners, an HO6 policy typically covers a number of items in addition to the insurance that is purchased by the condo’s association. While the condo association’s policy will cover things such as the cost of replacing the building when destroyed accidents or natural disasters, it will not cover your personal property. Therefore, having an HO6 policy helps to keep you personally protected from accidents and disasters.
Do I Have to Get an HO6 Policy?
While you are not legally required to obtain an HO6 policy for your condo, many condo associations require condo owners to obtain a policy. In fact, most do require coverage “by contract” and may even specify the amount of coverage you must have. The most common is to require a policy that covers the deductible on the association’s master insurance policy with coverage ranging anywhere from $5,000 to $50,000. If you took out a mortgage loan in order to pay for your condo, your lender may also require you to obtain an HO6 policy.
What is Covered by an HO6 Policy?
Generally speaking, an HO6 policy covers the following:
- Dwelling: items that stay “attached” to your unit, such as flooring, carpeting, drapes, and cabinets. Typical coverage is about $25,000, but you may opt for more coverage if you have made significant upgrades.
- Personal Property: Items that are not “attached” to your unit, such as furniture, electronics, appliances, clothes, and dishes. Typical coverage is about $35,000, but you may choose to increase coverage if you have highly valuable personal items to insure.
- Loss of Use: Covers the cost of obtaining another rental unit while your condo undergoes repairs caused by damage that makes it uninhabitable. Typical coverage is about $14,000, with the default commonly being set at 40 percent of the amount of personal property coverage.
- Personal Liability: While the condo’s master insurance will likely have some sort of liability coverage, this may not offer enough coverage and may do little to protect you personally. Personal liability covers you and members of your household against negligent bodily injury that may occur to someone who visits your unit. Typical coverage ranges from $500,000 to $1,000,000. If you want to be covered off-premise, such as while outside of your unit or otherwise away from your home, you will need to add an extension to your insurance policy.
- Medical Pay: Pays for small injuries for negligent injuries that occur in your unit. Typical coverage is $5,000 and cannot be increased. With Hawaii being a tort threshold state, medical bills must reach $5,000 before someone can sue for personal injury and claims above $5,000 typically trigger the personal liability portion of the policy.
- Loss Assessment Coverage: Covers your portion of the losses that the building must pay due to a legal settlement. Default coverage is typically $5,000 but can be increased.
Hurricane and earthquake coverage is not typically included but can be added if you feel the need.