There are five essential HO6 Policy coverages when it comes to insuring your condo or co-op unit. Many owners in a community association are confused about their responsibility in the event of a claim. Some owners do not realize they are responsible for improvements or betterments made by a prior owner. Some shareholders in a co-op assume that since they do not own the actual unit, they have no responsibility for the unit and should maintain renters’ insurance. Either of these could be a critical error. In addition to improvements or betterments made by the current or a prior owner, owners are typically responsible for finishings like wall-to-wall carpeting, wallpaper, and even the varnish on the floors and the paint on the walls.
There are five essential types of coverage within an HO6 Condominium Unitowners Policy.
- Improvements & Betterments (a.k.a. Additions and Alterations): the funds to restore your unit if damaged by a covered cause of loss. This could include kitchen cabinets, built-in wall units, wall-to-wall carpeting, wallpaper, paint, bathroom fixtures, tile, and upgraded flooring. It can also include coverage for the association’s deductible if required by the governing documents.
- Personal Property and Contents Coverage: provided for the owner’s personal property including furniture, rugs, TVs, stereos, clothes, etc.
- Loss of Use and Additional Living Expenses Coverage: provided for the additional costs of living away from home if the owner can’t live in the unit due to damage from a fire, storm, or other insured peril. It covers hotel bills, restaurant meals, and other living expenses incurred while the unit is being rebuilt.
- Personal and Family Liability: the funds for damages and defense costs if sued by another owner, the building, or their insurance company for damages. Coverage is provided for claims by others for bodily injury or property damage caused by the negligence of the owner or their family members.
- Loss Assessment Coverage: is provided if the owner is assessed in the event the co-op/condo association did not maintain adequate coverage for either a covered property (building) or liability loss.
Here’s an Example of a Claim Scenario:
Your upstairs neighbor leaves the water running and floods his bathroom. The water begins to leak down the walls and ceiling into your unit. This not only causes damage to your bathroom which was recently renovated but to your personal property as well. If your neighbor does not have insurance, then you can be left with the bill. It is important to make sure your insurance policy is up to date. Otherwise, you will be covering the cost of repairs.
Additional Policies & Endorsements to Consider:
It’s in your best interest to consider additional policies and endorsements such as a personal umbrella policy or a policy to cover valuables and fine arts. Protecting your family and assets is a top priority, which is why people have insurance. Personal Umbrella coverage is designed to cover catastrophic situations where a claim exceeds the limits of your existing policy. This can include your homeowners, auto, boat, and other underlying liability policies. Personal Umbrella will provide an additional layer of liability insurance after the limits of underlying primary policies are exhausted due to legal fees and indemnification.
Most people aren’t aware that their homeowner’s policy has special limits of coverage for Valuables & Fine Art. Under a homeowner’s policy, coverage for theft is usually capped at $1,000. Most people own items that exceed this amount, whether it be an engagement ring, valuable watch or fine art. Scheduling your valuable items not only provides higher limits of coverage but also provides broader worldwide coverage for these pieces.
Contact us at any time to ensure your insurance is adequate.