Freddie Mac, Fannie Mae and FHA all have new requirements regarding HOA condo insurance coverage that must be carried by condo owners. Under the new lending guidelines, the lenders are now requiring owners of condominiums to obtain HO-6 policies.A “HO-6” policy is like a regular homeowner’s policy, but for a condominium unit, and with a lot more extra items covered. HO-6 insurance polices cover the interior of the unit and personal property inside the unit. In most cases, the master insurance policy obtained by the association covers the association’s common areas such as the hallways, roof, basement, elevator, boiler, and common walkways, for both liability and physical damagebut not the inside of units including an owner’s furniture, appliances, etc. HO-6 policy benefits generally include the following items:
- Coverage for damage to a unit owner’s personal property (i.e. furniture, computer equipment and clothing);
- Fill in the gaps of the master insurance policy and cover losses under master policy deductibles;
- Personal liability coverage that insures you for claims for bodily injury or property damage that occur within your separate interest property;
- Interior walls and floor coverings coverage.
- Coverage for improvements or upgrades (most master insurance policies only cover the original condition and value of the unit).
- Loss of use coverage that covers your expenses for temporary lodging and additional items like food while your home is uninhabitable;
- Loss of rents coverage that reimburses you for loss of rental income while your home is uninhabitable.
Even if insurance coverage is not required by your lender, it is very important for individual members to obtain appropriate insurance coverage to protect their investment in their home.