What Does HO-6 Insurance Cover?
It covers your condo's interior, your belongings and your liability. The building itself falls under the association's master policy.
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An HO-6 policy picks up where the association's master policy stops. It covers the walls, floors and fixtures inside your unit, the parts you'd actually renovate or repair, along with your furniture, clothes and other belongings. It also covers liability if someone's hurt inside your unit, and loss-of-use costs if you can't live there during repairs. Check your association's master policy to see whether it's a bare-walls or all-in policy, since that determines how much interior coverage your HO-6 needs to carry.
How much interior coverage you actually need depends on that master policy, and the lender has its own minimum too. Guessing low to save money can leave you paying out of pocket to replace cabinets or flooring after a loss. Comparing quotes before closing lets you match coverage to what the association doesn't pay for, at a price that still fits what the lender requires.
What happens if the building itself is damaged?
If a fire, storm or pipe burst damages the building structure, the association's master policy is what responds first. That policy covers the shared roof, the exterior walls, the hallways and whatever structural elements the association is responsible for under its governing documents. Your HO-6 policy doesn't pay for any of that. Its job starts at the point the master policy stops, which is usually somewhere inside your unit's walls.
Where that line falls is spelled out in the association's governing documents and the master policy itself, not in your HO-6 policy. Some associations carry coverage down to your drywall, leaving you to insure only paint, flooring and fixtures. Others carry only the bare structure, which means your HO-6 needs to cover cabinets, countertops, built-in appliances and everything else inside the unit. Two owners in the same building can need very different amounts of coverage depending on which kind of policy their association carries.
There's also the special assessment to think about. If a loss is big enough, or the master policy has a high deductible, the association can bill unit owners for the shortfall. Many HO-6 policies offer an optional coverage for this, sometimes called loss assessment coverage, that pays your share if the association assesses owners after a covered loss. It's worth asking about specifically, since it's not always included by default and the amount offered varies by policy.
Before closing, it's worth getting a copy of the master policy's declarations page, or at minimum asking the association what it covers. That document, along with the lender's minimum coverage requirement, is what determines how much dwelling coverage to put on the HO-6 application. Buying coverage without checking either one usually means guessing, and guessing tends to go in the expensive direction after a claim.
What else does an HO-6 policy pay for besides the unit itself?
Beyond the interior and the structure questions, an HO-6 policy covers a few other costs that matter at claim time. Personal property is one of them, meaning furniture, clothes, electronics and anything else that would fall out if the unit were turned upside down. Most policies set this as a percentage of the dwelling coverage, so the amount you pick for interior repairs also shapes how much you get for belongings. If that number is too low, both sides of the policy come up short at once.
Loss of use is the piece people forget to ask about until they need it. If the unit becomes unlivable after a covered loss, this pays for a hotel, a short-term rental, even meals above what's normally spent at home. Coverage usually runs for a set period or up to a dollar limit, whichever comes first, so it's worth checking which one applies before assuming it covers however long repairs take. A kitchen fire that takes four months to fix can outlast a policy that only pays for sixty days.
Liability coverage works the same way it would in a house. If a guest is hurt inside the unit, or water damage from your unit spreads into someone else's, this is what responds, paying for the other person's medical bills or repair costs up to the policy limit, along with legal costs if it comes to that. Lenders rarely set a minimum for liability the way they do for dwelling coverage, but going without enough of it means the owner is personally on the hook for whatever the policy doesn't cover.
Medical payments coverage is a smaller, related piece, usually a few thousand dollars set aside to cover minor injuries to guests without a liability claim being filed at all. It's not a large number on the application, but it's there to handle the small stuff quickly. None of these coverages show up on the lender's binder requirement the way dwelling coverage does, so it's easy to focus only on what satisfies the lender and skip over the parts of the policy that would actually matter most after a break-in, a fire or a guest's fall in the kitchen.
Before you sign anything
Get the master policy's declarations page from the association and check whether it's bare-walls or all-in. That one document tells you how much interior coverage your HO-6 needs to carry.
