From first time home buyers, to retirees looking to simplify their lives, condo’s can be a great choice for your next home. Insuring a condo is a bit different from a single family home because the coverage for damage to the building is separated from the coverage for the interior of each owners unit. The building coverage is the responsibility of the Homeowners Association. This policy is referred to as the HOA Master Policy, and a portion of your HOA dues are used to pay the premiums of this policy. The policy that covers the interior of your unit is referred to as a condo unit owners policy or H-06. As an owner, you own the H-06, and can customize it to your individual needs. Lenders historically have required only a copy of the HOA Master Policy as verification of insurance. With stricter lending requirements, a unit owners policy (HO6) may also be required .
Here’s a description of both policies for your comparison:
Unit Owners (H-06) Policy
- Covers your personal property
- Covers personal liability
- Covers interior walls and floor coverings
- Covers improvements or upgrades you made
- Usually has small deductible & fairly inexpensive
- Some lenders and associations require you have such policy
Masters policy (Policy for homeowners association)
- Does not cover your personal property
- Does not cover liability inside condo
- Does not cover improvements or upgrades you made
- Covers the condo building and some liability (such as walkways)
Why is the unit owners policy important? Imagine a fire in your building, and the interior of your unit is damaged. You need to replace sheet rock, flooring, and remove the smoke damage for a cost of $20,000. Most of us do not have a cash reserve that would prepare us for a loss of this size, and if we did, we’d probably want to save it for other purposes. Whether required by your lender or not, a condo unit owners policy will protect you in the event of this type of loss.
Buying a condo? Call us for a quote today. 510-842-3600.
