When you buy a condo or townhouse your association likely has a master insurance policy that covers the whole complex. Although it usually includes coverage for individual units it is typically what is referred to as “walls out” coverage. That means while the exterior of your unit and common areas are covered by the master association policy, it does not include “walls in” coverage for your individual unit. If there is a fire, for example, the association is responsible for the building exterior but you are responsible for the interior of your unit.Every association secures its own insurance coverage so be sure to read the policy for your association to understand what is and is not covered… every situation is different. As insurance costs rise, associations are also going to higher deductibles… leaving individual unit owners responsible to make up the difference.
This is where HO6 policies step in and are very important. Lenders now usually require an HO6 policy as a requirement for your mortgage.
An HO6 “condo” policy typically covers:
- Personal property such as furniture, computer equipment, clothing
- Interior walls, floor coverings, appliances, improvements such as kitchens and baths
- Personal liability in case guests injure themselves in your unit
- Gap insurance for the association master insurance policy for items not covered and high deductibles
The good news is these policies typically have small deductibles and are fairly inexpensive. Give a copy of your association’s master policy to your insurance agent to make sure you have adequate HO6 coverage in case you need it.