Condo insurance HO-6 or HO-3/HO-B?

Started by JdW • 17 replies • 1085 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

JdW (Texas)
Posts: 40

Posted:

I think I have the wrong insurance for my condo but I'm not sure if it matters.

I was sold by Geico an HO-B (similar to HO-3) insurance for my condo. It's $30,000 property coverage and $300,000 liability. Loss of use coverage is $6,000. It's $200 a year. Deductible $500. It's a tiny 400 sq ft condo, low end. Not much personal property in it < $8,000, but I know I'd need to repair all interior walls in any fire / rebuild. Owner occupied.

HO-6 insurance "condo insurance" is about twice as expensive from what I've seen so far.

My annual policy is coming up for renewal later this month, so now is the time to consider any changes.

Am I making a big mistake I'm not seeing by not having the official "condo insurance" and by keeping regular home owner's insurance?

Any broader suggestions welcome on the topic of condo insurance.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Disclaimer: I'm not an insurance agent. However, I live in a condo and carry HO-6 insurance; my association carries "all in" insurance, as mandated in the Declaration.

If it were me, I'd have a talk with my insurance agent. Before selling you your policy, your agent should have asked to see a copy of your Declaration or other governing documents, because this is where it spells out what you are personally liable for and what is the association's liability. Your agent should also have asked to see a copy of the association's Certificate of Liability Insurance.

Some associations carry fairly bare-bones insurance, others carry something called "all in" insurance which covers much more in the event of a loss. If your association has "all in" insurance, then it would actually cover some things inside your home. Think of your home as a box, then flip it upside down - anything that is attached (cabinets, flooring, bathroom fixtures, etc.) would be covered by your association's "all in" insurance, anything else would be the owner's responsibility. However, if your association does not have "all in" insurance, then you would be responsible for the attached items as well as personal belongings such as clothing and furniture.

Don't confuse maintenance responsibility (routine upkeep) with insured events (fire, flood, earthquake, storm). Condo owners are usually responsible for maintaining everything inside their homes. However, "all in" insurance will actually insure some of the interior. It can be very confusing, even for folks who deal with this stuff all the time.

The goal of your condo insurance policy is to make sure that there are no gaps in coverage. If your association has bare bones insurance, obviously you'll have to personally insure more. Your agent should be able to explain all of this to you.

KerryL1 (California)
Posts: 14,550

Posted:

I'm weak at insurance matters. but our condo HOA is only "bare walls" insured, so we owners would have to cover cabinets, flooring materials, etc. My HO^ policy also covers my unit causing damage to neighbors' condos , e.g. overflown toilet that causes damage to units below. The coverage includes THEIR loss of use.

Around here, an HO3 policy is referred to as renters insurance and covers only the personal possessions of the insured.

I think overall, Cathy is right and she advises, talk with your agent.

KerryL1 (California)
Posts: 14,550

Posted:

My line 2 typo should say HO6.

JenniferG11 (Texas)
Posts: 667

Posted:

Does your complex have stacked units?

RichardP13 (California)
Posts: 3,868

Posted:

Your policy should start where the HOA's ends. If there is a master policy covering the unit, the policy you would need is an HO-6 policy.

JenniferG11 (Texas)
Posts: 667

Posted:

HO 6 is homeowners insurance. Comprehensive for condos, not like renter's insurance, which only covers contents and liability.

JdW (Texas)
Posts: 40

Posted:

Yes, it's stacked.

Upon further reading, it seems the HO-B is indeed just for personal property and has no coverage for the internal dwelling structure- e.g., drywall, toilet, sinks, so I definitely had some exposure there. I have nowhere near $30k in personal property, but the internals (dry wall and further in) would be about $12k to rebuild, as it's such a small space.

I was able to tailor a more precise estimate for HO-6 on Geico for $15k internal dwelling / $15k personal property and also a high loss of use coverage ($20k), which is important to me, for around $220/yr. Also include $300k personal liability, and $5k water backup damage.

JenniferG11 (Texas)
Posts: 667

Posted:

If they are stacked, then per Texas law the master policy must insure the interiors 'everything that doesn't fall out when turned upside down' in the case of fire or other disaster, however, we still have to keep coverage. At least I do. We have a 10K deductible. And what if I, God forbid, start a fire due to negligence (accident). The 10K would be assessed to me. AND if something happened that was under 10K, even if it was $9,999.99, I'd not be covered.

Whether that was a small kitchen fire, or a storm that made a tree come through my wall, or whatever. Hypothetically, if the master policy didn't have such a high deductible, I could rely on that, avoiding paying for double coverage, but I did not research into that - other pitfalls - since in fact the master policy does have such a high deductible.

JdW (Texas)
Posts: 40

Posted:

Thanks. I think I misunderstood the term "stacked" - it's not a (multilevel) townhome, but a 3 story garden apartment style condo building, with independent units on each floor.

JenniferG11 (Texas)
Posts: 667

Posted:

Actually the wording in the statute is 'horizontal boundaries', which you have if there are three stories. I.E. 'stacked'

GenoS (Florida)
Posts: 4,276

Posted:

I'm not an insurance expert, either, but I know my HOA is very much like a condo in many ways when it comes to insurance. It's spelled out in our CC&Rs. The HOA maintains a master property insurance policy that covers the exterior shells, including roofs, on all buildings which includes the 100 residences. Homeowners are routinely advised by our insurance agency (several agencies over the last decade) to purchase HO-6 policies along with any riders or extended coverage that they might want.

The practical danger of having an HO-3 policy here is that ideally you want everything to be covered without any duplication of coverage. If the HOA's master policy is written to cover your roof and exterior walls, and you carry a separate HO-3 full homeowner's policy, who pays if a bad storm causes significant damage? You'll undoubtedly get paid eventually, but it can take YEARS while the two insurance companies point their fingers at each other claiming the other is responsible for the claim.

Ask your insurance agent and if he/she can't explain it to you to your satisfaction, go shopping for a new agent.

JenniferG11 (Texas)
Posts: 667

Posted:

IDK about that. Not saying it's untrue. Just that it isn't always true.

One thing I do NOT understand about our fire is that no one's personal insurance pointed to the master policy. They just paid for all of it. I called my insurance agent when I first learned of all this and they were like 'We have never heard of a master policy covering the interiors at all. We cover you for that.' I said do you want to see our governing documents and the master policy? Nope, they did not.

I was trying to ascertain the precise point where the master leaves off and mine begins. They said we are not lawyers. In the end, as I mentioned, I decided it's moot. Due to the 10K deductible. I guess I could keep 10K for rebuilding and then whatever for contents, but I am 'paranoid'. I feel better being fully covered, even though it is irksome to pay for double coverage.

Not to mention the association might go slow, or not want to make the claim, and my individual policy might go faster. I wouldn't want to be stuck depending on the board to act as my 'attorney in fact' and make the claim for me.

I also do not know how much current rebuilding costs are to maintain the appropriate amount, but I can find out when the master policy pays out for the unit that didn't have individual insurance. The PM should be able to tell me the total cost of rebuilding that interior, and then I only have to calculate my contents.

RoyalP
Posts: 1,104

Posted:

..... Ask your insurance agent and if he/she can't explain it to you to your satisfaction, go shopping for a new agent. .....

PERFECT

JohnC46 (South Carolina)
Posts: 14,265

Posted:

JdW

If I am reading your posts properly, there is only a $20 per year difference from limited coverage to soup to nuts coverage. If so, is this even worth asking?

JenniferG11 (Texas)
Posts: 667

Posted:

I think he already raised his coverage. I question whether the interior, all the stuff plus appliances, could possibly be rebuilt with only $15K. But, the master policy has to cover in case of a fire or other disaster. If it does not, the association has to rebuild it anyway, using assessments. Unless the deductible is over $15K, this might be ok. He did up the 'loss of use' as well, which a lot of people do not realize they need quite a lot of.

Imagine it running out and your condo still isn't rebuilt. Now you are 'homeless' until it is habitable again.

JdW (Texas)
Posts: 40

Posted:

I was able to get the price down by trying some other companies.

The initial few companies insisted on a minimum of $40,000 for Dwelling (interior) coverage, which made, with other aspects, > $400/yr premium.

I was able to carefully tailor my plan to just what I need. It's really a small condo with basic facilities, so I'm probably the exception. Loss of Use I bumped up a lot, to $15k.

$192/yr is:

$15k dwelling
$15k personal property
$100k personal liability (no animals) - I rarely have any guests. 1st floor unit, so I cannot flood several units below me.
$1k medical payments
$5k water backup
$15k loss of use
$10K HOA loss assessment
$500 deductible

Me: age 50+, 800+ credit score, no claims history

WendyL1 (Michigan)
Posts: 2

Posted:

may want to check into adding special assessment to policy... if any special assessment(my case a lawsuit over our policy limits which may mean each owner would be assessed 10,000. would be covered if you have enough. It was only 4.00 more on my policy for 50,000. coverage.

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here