Understanding the HO-6 Unit-Owners Form
The HO-6 Unit-Owners Form is a unique contract within the homeowners insurance series, specifically designed for owners of residential condominium units or cooperative apartments. Unlike traditional homeowners who own the land and the entire structure (covered by an HO-2 or HO-3), condo owners share ownership of the building's exterior and common areas with other residents through an association.
For the Property & Casualty exam, it is essential to understand that the HO-6 is often referred to as "walls-in" coverage. It bridges the gap between what the Condominium Association’s Master Policy covers and the personal property and liability needs of the individual unit owner. This policy is part of the broader complete Homeowners exam guide and is a frequent topic in licensing assessments.
Master Policy vs. HO-6 Unit-Owner Policy
| Feature | Association Master Policy | HO-6 Unit-Owner Policy |
|---|---|---|
| Primary Structure | Roof, Siding, Common Halls | Interior Walls, Flooring, Cabinetry |
| Personal Property | Association-owned items | Owner's Furniture, Clothing, Electronics |
| Liability | Common Area Injuries | Injuries inside the individual unit |
| Loss Assessment | N/A (The Assessor) | Coverage for shared liability/loss |
Coverage A: The 'Walls-In' Concept
In a standard HO-3 policy, Coverage A (Dwelling) is the largest portion of the policy. In an HO-6, Coverage A is significantly more focused. It protects the parts of the dwelling that the unit owner is responsible for according to the association's bylaws or the condominium declaration.
Typically, this includes:
- Alterations and Improvements: Upgrades made to the unit, such as new hardwood floors or custom cabinetry.
- Built-in Appliances: Items like dishwashers and ovens that are part of the unit structure.
- Interior Walls: The drywall, wallpaper, and paint within the unit's perimeter.
Exam candidates should note that the HO-6 provides Broad Form (Named Perils) coverage for Coverage A, though it can often be endorsed to Open Perils. This is a key distinction from the HO-3, which provides Open Perils for the dwelling automatically. To practice identifying these differences, visit our practice Homeowners questions.
HO-6 Coverage Highlights
Loss Assessment Coverage: A Unique HO-6 Feature
One of the most important concepts for the Property & Casualty exam regarding the HO-6 is Loss Assessment Coverage. Because condo owners share common areas (pools, lobbies, roofs), they also share the risk. If the association suffers a major loss—such as a massive liability claim or a natural disaster—and the Master Policy limits are exceeded, the association may levy an assessment against all unit owners to cover the remaining costs.
The standard HO-6 policy includes a base amount (typically $1,000) for Loss Assessment. This coverage applies if the assessment is necessitated by a peril covered under the unit owner's policy. For example, if the roof of the clubhouse is destroyed by wind (a covered peril) and the association charges each owner $2,000 to fix it, the Loss Assessment coverage would trigger to pay the policy limit toward that charge.
Exam Tip: Coverage C Perils
On the exam, remember that Coverage C (Personal Property) in an HO-6 form uses the Broad Form Named Perils. This means the loss must be caused by one of the 16 specifically listed perils (such as Fire, Lightning, Windstorm, or Theft) to be covered. It does NOT provide the 'Open Perils' coverage found in an HO-5 policy.
Frequently Asked Questions
Generally, no. The exterior structure, including the roof and siding, is the responsibility of the Condominium Association and is covered under their Master Policy. The HO-6 focuses on the interior of the unit ('walls-in').
An HO-4 is for tenants who do not own the unit. It contains no Coverage A (Dwelling) because the tenant has no ownership interest in the structure. An HO-6 is for unit owners and includes Coverage A for interior structures and improvements.
Yes. If an association has an 'All-In' policy, the master policy covers the original fixtures inside the unit. In this case, the unit owner's HO-6 Coverage A would primarily cover improvements and betterments made since the unit was originally built.
Yes, Coverage D (Loss of Use) is included. If a covered peril makes the condo unit uninhabitable, Coverage D pays for the additional living expenses incurred by the owner while the unit is being repaired.