A Few Pointers on Figuring Out Condo Insurance…
As a Realtor I help homebuyers purchase single family (detached) homes as well as townhomes and condominiums. While everyone understands that you need homeowner’s (or hazard) insurance in order to close the deal (in fact, lenders require it), there is a lot of confusion about (a) what condo insurance is, and (b) whether it is even required.
I asked Jill Harris from Farmer’s Insurance to explain it so my clients and readers of this blog can better understand this insurnace product.
From Jill Harris, Farmer’s Insurance…
I have been receiving numerous calls recently from clients whom are buying or re-financing their condos, and that proof of HO6 coverage is required for the loan to be approved.
So, what is HO6 coverage?
HO6 is designed for condo owners. The HOA condo insurance policy does not typically cover your actual unit or any of your belongings. Condo & co-op owners naturally assume that adequate insurance is covered in their association fees, which helps fund a master policy. However, this policy only covers common walkways, hallways, boiler, elevator, roof and basement for physical damage and liability. To protect themselves and the property within their unit, owners need to purchase a personal home insurance policy - a.k.a. HO-6 - designed for condos and co-op apartments.
Many people have HO6 insurance because they are required to if they have a mortgage on the condo, but the truth is that all condo owners should have a HO6 policy. Since the HOA insurance policy typically only cover up to the beams, the condo unit owner would be responsible for everything else, including the drywall. In the event of a loss, the condo unit owner would be left with an empty box, and they would be responsible for the re-build of everything else, including drywall, interior walls, fixtures, floor covering, kitchen, bathroom, cabinets, paint, etc. Thus, HO6 coverage is offered to help protect such costs against perils, and more!
HO6 policies can also include personal property liability protection, jewelry floaters, artwork floaters, and many more. I suggest increasing ones personal Liability at a high limit, like 300,000-500,000 this is very inexpensive for a good amount of coverage.
Loss Assessment is another endorsement that can be added. This is an inexpensive way to protect the individual unit owner against sums that the individual unit owner may be legally liable for as a result of bodily injury or property damage. Loss Assessment Coverage will protect the unit owner for special assessments as a result of liability claims (such as bodily injury and property damage lawsuits) or due to a covered perils like lightning, explosion, hail, windstorm, fire, civil disturbance, vandalism, theft, damage from falling objects, aircrafts or other vehicles and smoke. I would suggest getting adequate loss assessment coverage, since $50,000 in loss assessment coverage could cost a little as $20 a year.
Jill can be reached directly at 619-917-8164 or at jklug1@farmersagent.com
