HOA vs. HO6

By Mike Rossi:

It is more common than you think for condominium owners to believe that their homeowner’s association insurance (HOA) covers them for “everything.”  This couldn’t be further from the truth.

Each HOA is different and there are always variations as to what specifically an HOA is responsible for.  But generally speaking HOAs will cover the common areas and the building exteriors while the condo unit owner is responsible for damage inside the unit including floors, ceilings, cabinetry, personal property, liability claims, etc.  This is commonly referred to as a “walls-in” or an HO-6 policy.  For example, in the case of a kitchen fire or a burst water pipe, it will be the condo owner’s policy that restores the unit back to its original condition, not the HOA.

In the property management world, the need for a condo policy becomes even greater since the liability risk increases dramatically for the owner once the unit becomes tenant occupied.  Unfortunately, a tenant may not be as good of a steward of the property as the owner which potentially may lead to more incidents.  Policies for rental units are specifically endorsed as tenant occupied policies – often times referred to as “landlord protector” policies – to properly protect the landlord and rate for the risk.  A good rental policy will include “loss of rents” and “wrongful eviction/entry” coverages which, again, are not covered by the HOA policy.  Many property management companies knowing that their owners are very vulnerable without a condo policy will require them to have one in place.

Everyone’s HOA is different.  But in the end please don’t assume that your HOA has your back and consult an insurance professional to help you find the coverage gaps.  Yes, a condo policy is an extra yearly expense, but your condo is an investment of yours and something worth protecting.