How to Choose an HO6 Insurance Policy
If you got a mortgage to buy your condo unit, you’re most likely required to carry HO6 coverage. Even if you don’t have a mortgage, an HO6 insurance policy is just as important as a homeowners insurance policy would be to someone who owned a house.
HO6 policies come with a number of different coverage options. It’s important to understand what your choices are before you pick a policy.
Your Choice of Perils
HO6 policies come in one of two forms: named perils or open peril. Named perils policies only cover specific types of problems – fire, theft, and the like. The policy will include a list of potential problems and anything not listed is not covered. Open peril policies, on the other hand, cover all types of damage except for those specifically listed as not covered in the policy.
An open peril policy will be more expensive than a comparable named perils policy, but if you’re worried about damage from an unexpected source, the extra expense might be worth it.
The basic HO6 insurance policy is helpful, but may not be comprehensive enough to meet your needs. Policy limits may prevent you from securing the protection you desire for insurance on your personal belonging or protect against vandalism. Additional riders providing protection for covered perils not included in an HO-6 policy isn’t just a good idea. It’s necessary.
Consider adding one or more of these other types of coverage.
Certain types of damage are almost never covered by HO6 insurance, including flood and earthquake damage. If you’re concerned about either of these types of damage, you’ll likely want to get a separate policy of that type. For example, if your condo is in Southern California, earthquake insurance might be a wise investment. Similarly, flood insurance will cover the cost of any water damage to your property if you live close to a coast or in a rainy area.
Loss assessment coverage covers any damage expenses to common areas of the building that unit owners would be expected to pay, at least in part. This typically happens if the damage is significant enough that it exceeds the master insurance policy’s coverage cap. Find out what the coverage limits are for your building’s master insurance policy, and that will tell you if a loss assessment coverage policy would be a smart move.
If you leave your condo vacant for 30 days or more, your HO6 insurance policy may not cover any damages that occur during this time period. Vacant condominium insurance, on the other hand, is designed for just such situations. You can purchase vacant condo insurance before you leave for an extended trip to ensure that your unit will be covered if the worst happens.
Condo owners with high-value units or lots of expensive possessions may not be able to obtain HO6 coverage that’s high enough to replace or repair everything. In that case, an umbrella insurance policy can be a smart purchase. Umbrella insurance takes over after you hit another policy’s coverage cap. For example, if your HO6 coverage cap is $500,000, an umbrella insurance policy might offer coverage between $500,001 and $1 million.
Before deciding on extra coverage, be sure to understand what your building’s master insurance policy covers. Your condo association’s master policy covers what’s outside of your unit, such as the roof. You pay for the premiums as part of your association dues. If the master policy will cover something, there’s no need to buy duplicate coverage.
Common HO-6 Policy Discounts
While typically lower than other home insurance policies, condo insurance costs can still be high. Luckily, saving on condo insurance coverage is easy. The most common discount you’ll find is for bundling condo insurance with another type of insurance policy at the same company. Often called the multi-policy discount, many homeowners bundle their home and auto insurance.
But that’s not all you can bundle. Life insurance, umbrella insurance, boat insurance — any insurance policy your provider offers usually come with an additional discount.
Beyond bundling, you can find discounts for: