Whether you’re a property owner or new to the insurance industry, you’ve likely heard the term “HO-6,” but what is it?
An HO-6 policy is much like a typical homeowner’s policy, but for a condo unit and it tends to carry a lot more extras. HO-6 policies cover the interior of the unit and personal property inside—commonly known as “walls-in” coverage.
Why have we been hearing this term so much more? Under the Fannie Mae and FHA overhaul of condominium lending guidelines, lenders are now requiring HO-6 policies for new condo unit purchases. While it sounds like common sense now, HO-6 policies weren’t always required by lenders which gave many unit owners the impression that the master policies covered all damage to the interior of their unit as well as furniture, appliances, etc.
HO-6 policy benefits include:
- Coverage for damage to personal property
- Fills in the gaps of the master insurance policy and covers losses under master policy deductibles
- Personal liability coverage
- Interior walls and floor coverings coverage
- Coverage for improvements or upgrades
- Usually has a small deductible and is relatively inexpensive.
Another benefit of an HO-6 policy is that in certain situations, it will provide gap coverage caused by the often high deductibles on a master insurance policy. Often times, condo documents provide that the unit owner is responsible for losses falling below the deductible. A well-tailored HO-6 policy will protect you in this situation.
While there is often still confusion surrounding a condo master policy and what it covers, it is important to know that it typically does not cover the interior of a condo OR the belongings in it. An HO-6 policy is a great way to cover that lapse of insurance.