Condo insurance that bridges the gap in coverage between your condo association’s master insurance policy and your property/personal liability protection is known as a H06 condo insurance policy. If you are acquiring a mortgage in order to purchase a condo, your mortgage lender will most likely require you to purchase this policy.
Every condominium development has a master insurance policy that covers items such as the actual building in which you reside, all of the common area elements (pools, gyms, lobbies, etc) and provides worker compensation for those employed by the condo association (if any). However, these master insurance policies typically stop at the four exterior walls of your condo. This means that not only are your personal contents not insured by the master association policy, neither are any of the items within the four walls of your condo: cabinets, appliances, flooring, jetted tubs, etc. Moreover, many associations no longer cover the replacement of exterior windows, this is something you need to inquire about prior to purchasing a condo.
Each homeowners association is unique and each can have different rules pertaining to individual liability for damages due to fire, flood, or negligence. Many association by-laws require the owner of the condo in which the problem originates to be held responsible for adjoining unit damages, while others stipulate each owner will be responsible for their own damage no matter the original source. It is very important that your H06 condo insurance policy cover your complete liability based upon what your condo association by-laws and rules state.
Who Provides H06 Condo Insurance Policies
All of the large insurance companies do write H06 condo insurance policies (State Farm, Allstate, USAA, etc), but so do many of the smaller insurance agencies in your city. If you have car insurance or life insurance with one of these larger companies, they will typically discount your H06 insurance policy just as they would if you were to add an additional vehicle or perhaps fine art insurance. However, do not be fooled, many local insurance companies can beat the ‘big guys’ on both cost and coverage. Do not be afraid to shop all companies for your H06 insurance policy. Many times you will find better insurance for all of your needs during this process.
How Much a H06 Condo Insurance Policy Should Cost
H06 condo policies can be as inexpensive as $14 per month, but for the average condo in Nashville, your monthly expense is going to be closer to $25 – $35 a month. However, if you own a rather large condo, have fine art, very expensive furniture or other items that are unusually expensive, your policy cost will be higher.
Disclaimer: I am not within the insurance industry. The above information is a compilation of what I have observed and learned after selling more than 150 condos in Nashville, TN.
Additional Information From an Insurance Expert
Kevin Michelson, MBA of Liberty Mutual points out a couple of condo policy add-ons that you should consider.
Loss Assessment: Provides coverage for your share of loss assessment charged against you by an association of property owners when the assessment is made as a result of direct loss to property owned by all members collectively or as a result of liability from property damage or bodily injury (subject to covered perils and exclusions).
Home Computer Endorsement: Liberty Mutual’s program covers $5,000 worth of desktops, laptops, smartphones and iPads for $20 a year and a $50 deductible rather than the standard policy deductible. This is a great alternative to Verizon or ATT’s plans.