Glossary
HO-6 policy, defined
The homeowners form written for a condominium or co-op unit owner, covering what the association's master coverage leaves out. It insures the interior of the unit from the studs in, the owner's contents, loss of use, and personal liability; the building shell and common areas belong to the association's master policy.
In practice
The dwelling limit on this form is the number people get wrong. It depends on where the association's coverage stops, which the condominium declarations and the master policy set: a bare-walls master policy leaves cabinets, flooring, fixtures and interior walls to the owner, while an all-in master policy covers original fixtures but not upgrades. Loss assessment coverage is the other piece to review. It pays the owner's share when the association levies a special assessment after a covered loss or to fund a master-policy deductible, and those deductibles can be large, so a small default loss assessment limit is often too little. The analysis reads the association's documents before pricing the unit.
A worked example
Suppose a unit owner carries $50,000 of dwelling coverage and $5,000 of loss assessment. A fire in the building's garage triggers a $250,000 master-policy deductible that the association splits across fifty units, $5,000 each. The owner's loss assessment coverage pays that share. Suppose the fire had also destroyed $30,000 of the owner's upgraded kitchen; the dwelling coverage would pay it less the deductible, because the master policy covers only the original builder finishes. Hypothetical figures.
Applies to: Home Insurance