Tips & Info for Residential Condo Owners

Your personal property is covered by a unit owner’s policy commonly referred to as an HO6 policy. An HO6 policy provides you with personal property and liability insurance. Make sure the contents limit you choose represents 100% of the personal property you own. Do a quick inventory in every room. One way of determining what you should cover is to imagine turning your house upside down and then cover everything that falls out. Certain items like fine arts or jewelry should have appraisals and be specifically scheduled on your policy. Think about how much money you would need to replace EVERYTHING! Below is a checklist of some of the important items your homeowners policy should have:

1) Coverage A-(Dwelling) Most HO6 policies provide a minimum of $5,000 of unit owner’s coverage under section “A”. Unless your master policy covers individual’s improvements and betterments (such as upgrades to flooring or kitchen cabinets), and you have properly informed your association in writing of the improvements, you will want to make sure that your coverage “A” limit is enough to replace the improvements that have been done to your unit. You will also want to make sure that your coverage “A” limit is at least the same as the master policy deductible. Because of the way the master policies administer losses, many condominiums have been increasing the deductibles on the master policies to reduce the number of claims placed against the condominiums policy and to reduce premium overhead. In most cases, your HO6 policy will be the first to respond (pay) for any covered losses. Once the claim exceeds the master policy deductible limit, the master policy insurance will usually take over.

2) Coverage C- (Contents)- This is where you select the total value of your items which you chose to cover. Make sure you have Replacement Cost coverage on your policy. In the event of a covered loss (such as a fire) your personal property will be replaced at today’s cost without any deduction for depreciation.

3) Coverage E (Personal Liability)- This covers you for bodily injury or property damage that you cause. Most policies start at $100,000 of protection, but for very little money, you can increase that limit to $500,000. If you want higher limits, you would usually need an Umbrella policy. An umbrella policy provides additional liability coverage after your HO6 and auto limits were exhausted.

4) Loss Assessment coverage- This is something every condo owner should have. As a unit owner, you could be assessed a proportionate share to cover major property and liability losses. For example if the building and commonly owned areas are destroyed by a windstorm or fire, and the losses are not fully covered by the master policy, your association may assess all unit owners a certain amount in order to pay for the loss. Your HO6 loss assessment coverage would help pay for these assessments. You should consider at least $5 or $10K in coverage. This too is an inexpensive coverage, so the higher the limit the better.

As you can see, there are just a few important coverage selections which require your regular review. However, there are many other coverage’s which can be added to tailor a policy around your specific needs. For a comprehensive review of your insurance, please feel free to call Craig Childs at 978-462-4434 ext 336.