When you buy a condo, ordinary homeowners insurance won’t adequately protect your investment. Instead, you’ll need condo insurance, also called HO6 insurance. Unlike a homeowner’s policy, condo insurance has two parts, the HO6 insurance that you buy and the policy held by the Homeowners Association (HOA), which oversees the implementation of the rules and regulations in your community.
If you want to know the nitty-gritty of what a condo insurance policy covers, check out the information below.
What Is Covered by Condo Insurance?
Condo insurance is very similar to homeowners insurance. It covers specific things, such as the building itself, your property, and your guests. The various types of condo insurance coverage include:
Dwelling coverage: This coverage helps to protect your walls and the interior when it comes to damage by one of the covered perils on your policy. Depending on your HOA’s policy, you might only need to provide coverage for special features, such as your tile or hardwood floors.
Personal property coverage: Your personal belongings are also covered by your condo insurance, including your clothing, appliances, electronics, and items worth less than a certain dollar amount. For more expensive items, you’ll need an endorsement.
Endorsement: Endorsements cover high-value items, such as jewelry and works of art.
- Scheduled endorsement: For really expensive, individual items, you need a scheduled endorsement. This type of endorsement requires you to get the item appraised.
- Liability/medical expense coverage: If one of your guests is injured while on your property, then your liability/medical expense coverage pays for their medical costs, even in cases where you weren’t negligent. It also provides liability coverage for any related legal expenses if you’re later sued by your guests.
Loss assessment coverage: Loss assessment coverage protects you if the building’s HOA policies fail to carry the required amount of insurance. An example of this is when the association’s policy doesn’t provide enough coverage for losses that occur in your condo building’s common areas. Loss assessment coverage pays for these costs instead of it coming out of your pocket.
What Is a Master Policy?
Your HOA also has an insurance policy in place. This insurance provides coverage for such things as the common areas within your neighborhood, such as the lobby of the main office, an exercise room, swimming pool, or outdoor area.
The HOA’s insurance policy can also provide coverage for parts of the condo that you own. The two different types of policies your HOA’s might have include:
Bare walls coverage: Bare walls coverage extends to the exterior walls of your condominium and the area outside of your condo. It also includes the basic walls of your dwelling and excludes the flooring, plumbing, electrical fixtures, and other items that make your condo a home.
Walls-in coverage: Walls-in coverage has similar protections compared to bare walls coverage. In addition, walls-in coverage protects basic flooring, plumbing, and electrical fixtures, among other items in your home. Any specialized items, such as hardwood floors, aren’t covered by walls-in coverage.
How Does Your Condo Insurance and Your HOA’s Insurance Work Together to Protect Your Condo?
Working together, both your condo insurance policy and the policy your HOA carries can help protect your condominium, as well as the property on which it sits. You should always check the bylaws of your HOA’s operating agreement to make sure that you purchase coverage to protect areas not covered by the HOA’s insurance company.
You might also need to purchase separate policies for uncovered perils, which can include flood or earthquake insurance, depending on where you live. Some other common exclusions on a condo insurance policy include wind and hurricanes, as well as sewage backup.