HO-6 insurance: How much condo insurance do I need?

by Guest » Tue Jun 12, 2007 03:40 am

Many individuals think that since the association owners have purchased insurance on the association they don't need insurance to protect their home. While it is true that the association owner will cover if your condo roof flies off, it will, however, not cover damage to any item inside your condominium. So, you need to get a separate coverage for your own safety.

What does HO-6 insurance cover?

A typical condominium insurance covers damage to your condominium, your belongings from perils like lightning, explosion, hail, windstorm, fire, civil disturbance, vandalism, theft, damage from falling objects, aircrafts or other vehicles and smoke.

How much condo insurance do you need?

To be able to determine how much condo insurance you need you must make a checklist of things you have to insure. You can begin by reading the master policy for the association. By reading the master policy you can find out what it covers and how much your condominium will be protected in case of any damage.

You can make a list of the things you would be responsible for like the flooring of your condo or the wall coverings, the plumbing fixtures, cabinets, any built-in appliances, lighting fixtures and any improvements made to your condo. Take some time out to add everything up to get an idea of home much condominium insurance you need.

Making a list of the personal property that you own would be a good idea to assess properly the amount of insurance you need to buy. Ask your agent for a content replacement option and how much it would cost you. Set your personal liability at a high limit to get a good amount of coverage. You could do the same for 'Loss Assessment' to cover you for big losses.

What you need to know before buying condominium insurance?

Master policy: Go through your master policy for the condominium to find out how much you are covered under that policy. Based on that you could assess what you need to cover to protect your condominium and your possessions from any damage due to a peril.

Deductibles: There is usually an association deductible in condominium insurance. So in case of a disaster be prepared to pay the deductible that will be divided amongst the unit owners.

Coverage required: Determine what you need to cover in your condominium and based on that draw up an assessment of the amount you need to invest in insuring your property.

Cash value or replacement cost: Find out which one you are opting for. A cash value will give you only the current value of an item minus the depreciation costs while a replacement cost would offer the total cost of replacing the item.

Interior structure and contents: Your association will not cover your personal property and the contents inside your condominium. You need to purchase coverage for the structure of your home and the contents inside your condo separately.

Flood and wind coverage: Make sure you buy flood if you live in a flood prone zone. Wind coverage is generally included in a typical policy.

Related reading:

I have a question about ho-6 insurance. I need to purchase an ho 6 insurance policy which will, among other things, cover replacement cost for internal real property (drywall, wall coverings, carpet, window treatments, etc.). What's the rule of thumb on how much coverage to get for internal real property? The purchase price of my condo was $115k.

Total Comments: 195

Posted: Sun Sep 25, 2011 02:29 pm Post Subject:

What do they mean by unfinished interior surfaces of the PERIMETER walls, etc?

These would be the walls inside your unit. "Unfinished" means bare drywall . . . thus, wallpaper, paint, or other "surface treatment" (like carpet over an unfinished floor or texture coating over drywall) is not the responsibility of the Association. But the drywall itself IS. At least that's how I read the sections of law as presented.

As I mentioned in my first post, a standard Condo HO-6 policy covers from the inside walls in, because from the inside walls out, that is supposed to be someone else's responsibility . . . the Association's. So the property portion of your HO-6 covers the wall finish, possibly the wallboard (if damage is due to your negligence). The liability portion of your policy would cover your negligent damage to the interior of the wall/ceiling/attic space. If a fire in a neighbor's unit damages yours, your property coverage protects the inside of your unit, not the Association's.

Thanks for pointing me to Section F. I don't totally understand that though.

As I read the plain language used by the legislature, it says that if you and your Association both have coverage for the same damage, your Association's coverage is primary -- it pays the full amount of the loss up to the policy limit. If that is not enough to cover the full loss, then your coverage, as secondary, would pay the remaining loss up to its limit. Between the two policies, that would most likely cover 100% of a property or liability loss.

So if the (nonnegligent) fire in your neighbor's unit damages the walls of your unit, the Association's property policy is supposed to pay for the replacement of the "unfinished" walls. Your policy would pay to finish them with paint, wallpaper, or surface texture. But if your Association's policy exhausted its limit before all your repairs were complete, your policy would cover the unpaid portion, up to its limit.

But, to me, it looks very clear that if the sprinkler system was installed during the original construction, the Association must treat it as a "common element". It might help to also see the first paragraph under Section 12(b):

(b) Contiguous units; improvements and betterments. The insurance maintained under subdivision (a)(l) must include the units, the limited common elements except as otherwise determined by the board of managers, and the common elements. The insurance need not cover improvements and betterments to the units installed by unit owners, but if improvements and betterments are covered, any increased cost may be assessed by the association against the units affected. [ emphasis added ]

Now when you see the definition of "common elements" in paragraph 2, it is VERY CLEAR that what is INSIDE the walls and above the ceiling is the responsibility of the Association's insurance coverage as required by the law. Sprinkler systems installed at the time of construction, like other plumbing, are not "limited common elements" nor are they improvements or betterments.

Again, you may have to go to the CC&Rs to see exactly who is responsible for maintaining "common elements". It may be impermissible for the Association to shift the responsibility for maintaining common elements to unit owners. There may be something there that describes the "limited common elements", but the fire sprinklers are certainly not "limited" common elements.

You'll probably need to speak with a Real Estate attorney for better legal advice on this. I'm in California, and I'm simply applying common sense to a plain reading of the law. There may be case law on exactly something like this in Illinois that more clearly settles the matter, and an Illinois Bar-admitted attorney specializing in Real Estate would know.

Posted: Tue Oct 11, 2011 01:30 am Post Subject: obligation ??

please let me know if it is obligation take by the law and which is the number of it (law ) and wheere I can find it ..
thnks you very much

Posted: Tue Oct 11, 2011 04:36 am Post Subject:

Property (765 ILCS 605/) Condominium Property Act is an act enforced by law.

Posted: Wed Oct 12, 2011 11:17 am Post Subject:

Monawayne . . .

What makes you think Illinois law applies to the poster's question? Besides, the statute you cite does not have anything to do with insurance.

Posted: Mon May 07, 2012 11:56 pm Post Subject: Coverage for dwelling seems low.

I recently experienced a flood inside my condo and my dwelling limit is $8,000. Is this low? My cost just to have my place dried out with the Systems Master is eatting over $6,000 and it leaves me little to replace my wood floors, dry wall replacement & reinstall my sink & counter. The leak was caused by a pipe under the ground. My condo is valued at $50,000. and my square footage is about1,200. Please inform.

Posted: Wed Jul 18, 2012 03:11 am Post Subject: assestment deductibles

hi sil
in a citizens policy h06 owner occupied the ded for assestment to repair the roof is covered or just for losses?? also i have another question.. ded applies for assestment too?
please advice

Posted: Wed Jul 18, 2012 01:48 pm Post Subject:

Sil no longer works here.

If by "assestment" you mean a charge levied against all property/condo owners for expenses beyond the amount budgeted for maintenance by the Board of Directors (or whatever you association's title is), the answer is NO. Your insurance is for catastrophic losses, not routine maintenance.

Posted: Thu Aug 30, 2012 05:01 pm Post Subject: Asso. Deductible

Can you provide coverage on the HO-6 for the asso.5000 deductible that I am responsible for should a loss occur to my unit building. There would be no assessment since it is a loss to the building that I occupy.

Posted: Fri Aug 31, 2012 02:38 am Post Subject:

Your insurance only covers your negligence and your personal property. You can get an endorsement added to the policy to cover any Association deductible assessable to you in the CC&Rs. If that amount is only $5,000, you might actually be better off saving the money in a separate account than paying the insurance premium for it.

Posted: Wed Sep 12, 2012 11:47 am Post Subject: insurance for condo under an estate

I am trying to find insurance to cover a condo that is owned by an Estate for about another 6 months. It will not be permanently occupied, but it will not be vacant. I need coverage for the interior of the condo (carpet, fixtures, etc), but not the furniture or other loose contents. I also need liability insurance. I have been having trouble finding anyone who will cover this. Any suggestions?
By the way, the condo is in Florida, beachfront (though not facing the beach).

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