HO6 & HOA
Understanding HO6 And The Higher HOA Policy Deductible
BY : MALLORIE PAPIN ASSOCIATE ACCOUNT EXECUTIVE ATLAS INSURANCE AGENCY
I f you own a condominium or are looking to purchase one , you will likely become familiar with the term HO6 insurance . An HO6 insurance policy is homeowners insurance for those who own a unit such as a condominium or townhome .
The condo association will have a master insurance policy that provides coverage for common areas and the overall building that includes the original construction of each unit that comprises it . The HO6 policy is designed to protect the interior improvements or alterations that were made to your unit since original construction . In this article , we will compare the two policies .
WHAT IS THE ASSOCIATION MASTER INSURANCE POLICY AND ITS DEDUCTIBLE ?
As a homeowner , it is important to know how this affects you and what you can do to protect yourself if you need to use the building insurance policy . Condominium associations have an insurance policy to protect the building against accidental losses , commonly referred to as the master insurance policy . This policy not only covers the building as a whole but also the original construction of each individual unit within it . Recently , water-related damages have become a frequent occurrence causing associations to use the master insurance policy more often for repairs to common areas or individual units .
There is usually a deductible if the association files a claim under the master insurance policy . Under HRS § 514B-143 ,
Associations may choose the option to charge the cost of this deductible to a unit-owner .
THINGS THAT AN HO6 POLICY COVERS HO6 insurance will provide the following :
• Coverage for interior unit dwelling – Provides coverage for improvements or renovations to your primary interior dwelling and permanently attached fixtures against hazards like fire damage , storms , internal plumbing issues , or vandalism .
• Protection against theft of personal property – Covers personal items like clothing and freestanding appliances , furniture , and electronics .
• Personal liability – If you are found liable for injuries to others or cause damage to their property , the HO6 policy may cover the cost of the legal judgement and expenses .
• Additional living expenses – If you have other living expenses while your unit is uninhabitable because of a covered cause of loss , then the HO6 policy will be of assistance , such as providing the cost of lodging in the event of a fire emergency .
• Coverage for loss assessments – If you are responsible for additional costs shared by the condo association , HO6 may help you cover your assessed portion .
• Coverage for association master insurance deductible – Associations have a right to charge the cost of this deductible to a unit-owner affected in a covered claim in order to utilize the master insurance coverage .
INCREASING DEDUCTIBLES
Master policy deductibles have been increasing as a result of loss frequency and severity among many condominium buildings . The losses are seen in old as well as new buildings . Some deductibles have dramatically increased and are over six figures .
Condo associations are also facing more expensive building materials , extreme weather events , and a limited number of insurance companies in the market . While condo associations are bearing the brunt of these hikes in deductibles and premiums , condo owners are facing the trickle-down effect through increased association dues and needing to carry higher HO6 coverage that translates to higher premiums .
STEPS YOU CAN TAKE
Not every insurance company responds to the increased HOA deductible in the same way . It ’ s important to have a conversation with your insurance agent as to how your insurance policy will protect you .
If you are interested in learning more or you are purchasing an HO6 policy , get in touch with your Atlas Insurance Advisor today . +
Mallorie Papin brings eight years of insurance industry experience to the Atlas team , where she underwrites new and renewing personal lines accounts . She holds the Chartered Property Casualty Underwriter ( CPCU ), Associate in Insurance Services ( AIS ), Associate in Personal Insurance ( API ), and Associate in General Insurance ( AINS ) designations .
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