Just Bought a Condo - Why do I need an HO-6 Policy?

Scenario: You have just purchased a Condo and the lender wants you to purchase an HO-6 Policy as a condition of lending you money.

**Please Consult your Insurance Agent for specific coverage in your area. The following information is deemed liable but George Langford takes no legal responsibility**


What is an HO-6 Policy?

If you think insurance for your condominium is covered by your association fees, think again. Typically, your monthly condo fees are used to fund a building insurance policy. If your unit is robbed or damaged, your building insurance will not provide any coverage for your personal possessions, nor will it offer you any protection from personal liability. An HO-6 Policy covers the interior of your unit compared to the exterior of your unit that is typically covered in your monthly dues.


What does the HO-6 Policy Cover?

Under the general terms of HO-6 condominium owner coverage, your policy should cover your personal property from 16 perils:

Fire or lightning

Windstorm or hail

Explosion

Riot or civil commotion

Damage caused by aircraft

Damage caused by vehicles

Smoke

Vandalism or malicious mischief

Theft

Volcanic eruption

Falling objects

Weight of ice, snow, or sleet

Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning, or automatic fire-protective sprinkler system, or from a household appliance.

Sudden and accidental tearing apart, cracking, burning, or bulging of a steam or hot water heating system, an air conditioning or automatic fire-protective system.

Freezing of a plumbing, heating, air conditioning or automatic, fire-protective sprinkler system, or of a household appliance.

Sudden and accidental damage from artificially generated electrical current (does not include loss to a tube, transistor or similar electronic component)

Why is the Bank requiring this Policy if the HOA (Home Owners Association) has an Insurance Policy in place already?

It varies from lender to lender but most banks are now requiring an HO-6 Policy when purchasing a home, and they may require it even with a refinance. This is just an extra step banks are taking to ensure their assets (Properties) they lend on. Most policy run on average a couple hundred dollars a year. I would consult with your Mortgage Broker or Banker for more details.