Introduction to the HO-6 Form
The HO-6 Unit-Owners Form is a specialized homeowners policy designed specifically for the owners of condominium units or residential cooperatives. Unlike a standard single-family home insurance policy, the HO-6 must account for the dual nature of condominium ownership: the individual owns the interior space, while a homeowners association (HOA) or condominium association owns the building structure and common areas.
For candidates studying the complete Property exam guide, the HO-6 is often described as a hybrid between a renters policy (HO-4) and a traditional homeowners policy (HO-3). It provides coverage for personal property and liability, but also includes a unique form of dwelling coverage tailored to the unit owner's specific responsibilities.
Coverage A: The 'Walls-In' Concept
In an HO-6 policy, Coverage A (Dwelling) is significantly different from other forms. Because the association's Master Policy typically covers the exterior structure, roof, and common hallways, the unit owner's policy focuses on the interior of the unit. This is frequently referred to as "walls-in" coverage.
- Scope: It covers alterations, appliances, fixtures, and improvements that are part of the building within the individual unit.
- Items Included: Built-in cabinets, flooring, wallpaper, and interior partitions.
- Named Perils: It is important to note that for the exam, Coverage A in an HO-6 is typically provided on a named perils basis, similar to the perils found in the HO-2 Broad Form, unless an endorsement is added to make it Open Perils.
Comparing Homeowners Forms
| Feature | HO-3 (Special) | HO-4 (Renters) | HO-6 (Condo) |
|---|---|---|---|
| Dwelling Coverage | Full Replacement | None | Limited (Improvements) |
| Personal Property | Included | Primary Focus | Included |
| Structure Perils | Open Perils | N/A | Named Perils |
| Liability | Included | Included | Included |
Coverage C and Coverage D
Like other homeowners forms, the HO-6 includes coverage for the occupant's belongings and the financial impact of being displaced from the home.
- Coverage C (Personal Property): This covers the unit owner's furniture, clothing, electronics, and other movable property. This coverage applies on a named-perils basis and usually follows the property anywhere in the world.
- Coverage D (Loss of Use): If a covered peril renders the condo uninhabitable, Coverage D pays for Additional Living Expenses (ALE) so the insured can maintain their normal standard of living elsewhere. It also covers Fair Rental Value if the owner was renting the unit to others.
Students should practice identifying these coverages by reviewing practice Property questions to ensure they can distinguish between property owned by the association and property owned by the individual.
Exam Tip: The Master Policy
On the Property & Casualty exam, remember that the Master Policy (purchased by the HOA) is primary for the building's shell. The HO-6 is supplemental, covering the gap between the association's responsibility and the owner's personal assets.
Loss Assessment Coverage
One of the most unique features of the HO-6 form is Loss Assessment Coverage. Because condo owners share ownership of common areas (like pools, lobbies, and roofs), they also share the risk of losses occurring in those areas.
If the association suffers a major loss (such as a massive liability claim or property damage) that exceeds the limits of the Master Policy, the association may levy an assessment against all unit owners to cover the shortfall. The HO-6 policy typically includes a base amount (often $1,000) of Loss Assessment coverage to pay the unit owner's share of these charges, provided the loss was caused by a peril insured against in the owner's policy.