An HO6 policy, also known as condo insurance in Hawaii, is a type of homeowners insurance policy that covers condo unit owners. It can cover damage to your condo unit and belongings, liability claims, and additional living expenses if you can’t stay in your residence due to a covered incident.

Know the questions to ask about your condo homeowners insurance policy coverage so you don’t get left holding the bag for uncovered damages.

Don’t assume something is fully covered

It is important to ask your agent questions, to see what is covered, or what you would have to pay for different types of losses. For example, those homeowners whose carriers are not able to meet the AOAO’s high water damage deductible, it’s recommended that they go back to their insurance agents and ask them the following frequently asked questions:

  1. If I am assessed the Association’s water damage deductible, how is my policy going to respond on my behalf?
    Most insurance agents do not know that every insurance company in Hawaii handles the Association’s deductible differently. So, the agent would need to go to the insurance company and ask how they handle the Association’s water damage deductible.
  2. What line of coverage is my insurance company going to pay the deductible out of?
    As mentioned above, every insurance company pays the deductible out of different lines (pockets) of coverage. Some companies pay out of Dwelling (Fixtures/Alterations), some pay out of Personal Liability Protection, and some pay out of Loss Assessment. For carriers who pay out of Dwelling or Personal Liability, that would not be a problem. For those carriers who pay out of Loss Assessment, this is a problem because most carriers’ maximum limit is $50,000 so if the Association’s deductible is $100,000, the unit owner would need to pay $50,000 out of pocket. My recommendation is to have the agent ask the carrier if they would pay the Association’s $100,000 deductible out of both the Loss Assessment and the Dwelling limit. This way the unit owner can add $50,000 to Loss Assessment and $50,000 to Dwelling.

What’s generally covered in an H06?

Fixtures/alterations protection
Unit owners are typically responsible for covering the fixtures or appliances within the unit. This includes fixtures such as kitchen/bathroom cabinets and appliances such as refrigerators. The H06 policy provides protection against loss caused by covered causes of loss such as accidental discharge of water, fire, and theft. Please refer to your association documentation, however, to determine the specific items that you are responsible for Insuring.

Personal property protection
An H06 policy can also cover personal property such as your clothing, furniture, and televisions. The policy will protect against causes of loss such as accidental discharge of water, fire and theft.

Liability protection
The policy will help protect you against the legal responsibility for injury or property damage that you cause.

Additional living expense protection
If a covered cause of loss such as fire makes your condo unlivable, the policy will cover reasonable expense Increases (such as hotel/ rental casts) to maintain your standard of living.

Guest medical protection
If a guest in your condo is accidentally Injured, the H06 policy can provide payments up to $5,000 for reasonable medical expenses.

Optional coverages in an H06

Units rented to others
Most H06 policies exclude coverage when the unit Is rented on a regular basis. By adding the Units Rented to Others option, however, the policy will typically maintain the coverage on the policy with the exception of limiting liability coverage to the unit premises.

Property managers
If you hire a property manager for your unit, they will often want insurance coverage through your H06 policy. You can meet their insurance requirements by purchasing the Additional Insured-Property Manager option. This option typically provides protection to your property manager with respect to their liability as the property manager of your unit.

Replacement cost contents
Since personal property losses are paid on an actual cash value basis, you will receive the depreciated value of your possessions for total losses. Since items such as clothing depreciate very rapidly, you may only receive a fraction of the replacement cost at the time of loss. By purchasing the Replacement Cost Coverage option, you will receive the full replacement cost (not the depreciated value) for covered personal property losses.

Loss assessment coverage
The policy will also pay your share of certain assessments levied against you resulting from covered causes of loss.

Frequently Asked Questions

What does my association policy cover?
Your association’s master policy will typically cover the common area elements such as the buildings, walls, floors, ceilings — both exterior and interior “as originally built.” This does not Include upgrades such as upgraded flooring, wall covering, etc. The association policy usually will include built-in cabinets, counters, and appliances if they were part of the “as built” features of the original unit.

What does my association policy not cover?
The unit owner is typically responsible for their upgrades to the unit, personal property within the unit, and their lepl liability.

How much will this cost?
A typical H06 policy will cost between $200 and $350, depending on the type of building and the coverage purchased.

How can I reduce my annual cost?
We recommend that unit owners increase their deductibles to the highest amount that they can afford (typically $500 or higher). Increasing deductibles is a good way to reduce cost without reducing your protection against large losses.

How can I protect myself against damage caused by my tenant’s negligence?
The H06 policy covers your negligence/legal liability. The policy does not provide coverage for damage caused by your tenant’s negligence (for example, damage to your neighbor caused by your tenant letting the bathtub overflow). Your tenant would need to purchase a renter’s policy (H04 policy) to acquire this protection. You may want to ask your tenants to purchase this policy to protect you and them.