 Condo
The H0-6 policy is a special form of homeowners
insurance that was designed to meet the unique insurance
requirements of owners of condominium units and cooperative
apartments. An insured can only qualify for an H0-6 policy by
being an owner occupant of a residential condominium unit or a
cooperative apartment. The insured premises is defined as the
unit where the insured resides, an H0-6 policy can not be used
to insure a unit owned by the insured but rented or leased to
others.
The condominium unit is defined as the space between the
walls, ceiling and floor. Sometimes unit owners are responsible
for parts of the unit beyond the walls, ceiling and floor.
Condominium unit owners also have an undivided interest with
other unit owners in common areas of property. Common areas of
property could include the land, stairways, halls, parking and
storage areas, and the heating and cooling system. The unit
owner's responsibilities are usually outlined in the condominium
agreement and bylaws. The major loss exposures for unit owners
are loss to real property, loss to personal property, and legal
liability. The following is a basic outline of the H0-6 policy
and the endorsements most widely used on the H0-6 policy.
Dwelling
This coverage applies to the insured's real property, which
is the unit. Coverage is provided on a named perils basis and is
separated into four categories.
The first category includes alterations, appliances,
fixtures, and improvements that are part of the building and
contained within the residence premises such as built-in
appliances and cabinets, electrical fixtures, and similar items
of this nature.
The second category relates to items of real property that
pertain exclusively to the residence premises, such as exterior
glass or trees and shrubs that may be located on a patio that is
part of the residence premises.
The third category includes property that is the
responsibility of the unit owner to insure under an agreement of
a corporation or association of property owners. Insurance for
this category of property provides coverage for any portion of
the common areas of the building that the association agreement
states is the insurance responsibility of the unit owner.
The final category of property relates to structures owned
solely by the insured at the location of the residence premises
but are not a part of the residence premises. This category
could include a private garage that was not attached to the
residence premises but located elsewhere in the condominium
complex.
The basic limit of liability under coverage A is $1,000,
which can be increased if necessary. If the association or
cooperative insurance policy is written on a bare walls basis,
then the unit owner would have to provide coverage for the
entire interior of the unit. It is important for the unit owner
to review the condominium or cooperative association's coverage
to determine if the basic limit for Coverage A of the H0-6
policy is adequate.
Personal Property
This coverage limit applies to the personal property of the
unit owner. The limit of insurance is selected by the unit
owner. The unit owner's personal property may include such items
as furniture, clothing, television and stereo equipment, books,
records compact discs and tapes. It could also include any items
not considered part of the building structure. Items such as
carpeting, if placed over finished flooring, would be considered
personal property, but carpeting placed wall to wall over a
rough subfloor or concrete slab is usually considered part of
the building.
Loss of Use
This coverage is provided if a loss is caused by an insured
peril to covered property or to the building containing the
property, if it makes the residence premises unfit to live in.
The limit of insurance is 40 percent of Coverage C limit.
Personal Liability
This provides coverage if a claim is made or suit is brought
against the insured because of bodily injury or property damage
caused by a covered occurrence. Personal liability has a basic
limit of $100,000 per occurrence, which can be increased for an
additional premium.
Medical Payments
This coverage will pay the necessary medical expenses that
are incurred or medically ascertained within three years from
the date of an accident causing bodily injury to someone other
than an insured. Coverage applies to accidents that occur on the
insured premises, or any location, when caused by action of the
insured.
Endorsements
The following endorsements relate specifically to the HO-6
policy.
Unit Owners: Special Coverages (A)
This endorsement can be used to change Coverage A of the
HO-6 to provide coverage for risk of direct loss. When this
endorsement is used, all direct loss to real property, which
is the unit, is covered unless specifically excluded.
Unit Owners: Rental to Others
This endorsement provides property and liability coverage
for the unit owner while the residence premises is regularly
rented or held for rental to others. Theft coverage is
provided for personal property at a rented condominium,
however, high value items are not covered. Coverage for
medical payments are also included.
Loss Assessment Coverage
This endorsement increases the limit of liability for the
loss assessment coverage provided in the policy.
Loss Assessment Coverage for Earthquake
This endorsement provides coverage for loss assessment made
against the unit owner by a corporation or association of
property owners due to the peril of earthquake.
Unit Owners: Special Coverage (C)
The H0-6 provides coverage on a named-peril basis, when this
endorsement is added, Coverage C is changed to provide coverage
for all direct loss to personal property unless specifically
excluded.
Renters
The HO-4 renters policy is a combination of property and
liability coverages. The HO-4 policy is tailored to meet the
needs of a tenant. The following is a basic outline of the HO-4
Renters Policy and the endorsements most widely used on the HO-4
policy.
The HO-4 policy provides coverage for a tenant of a single
family residence or a tenant of an apartment. The policy focuses
on loss to personal property and loss to additions. Coverage for
legal liability is also included. The HO-4 policy does not
include coverage for the dwelling and other structures because a
tenant does not have an insurable interest in the building.
However, the HO-4 policy provides coverage for building
additions and alterations made by the tenant. Personal Property
is covered against direct physical loss caused by a specified
peril. In addition to the coverages provided under Section I of
the policy, additional coverages are included for debris
removal, fire department service charges, loss assessment
charges, reasonable repair charges, and property removal
charges. Payment is also made for loss involving credit cards,
forgery, and counterfeit money. The additional coverages are
included to provide additional protection in the event of
certain peril losses. All additional coverages are subject to
certain limitations and conditions.
Personal Property
This is the primary limit of insurance coverage for the H0-4
policy. Coverage C provides worldwide coverage for personal
property of the insured. Special limits apply to some types of
property, and some types of property are excluded from coverage.
The insured selects the limit of coverage which is determined by
the value of personal property owned.
Loss of Use
Coverage D applies if a peril insured against under Coverage
C makes the residence unsuitable for living. Payment would be
made for expenses incurred to live elsewhere following the loss.
The limit for Coverage D is 20% of Coverage C.
Personal Liability
Section II of the renters policy provides liability coverage
for personal loss exposures. The insuring agreement under
Coverage E provides liability coverage if a claim is made or
suit is brought against an insured because of bodily injury or
property damage. Coverage is provided for the named insured and
members of the insured's household who are relatives. Personal
Liability has a basic limit of $100,000 per occurrence. The
insured may increase this limit for an additional premium. In
addition to the basic limit, Coverage E also provides additional
coverage for expenses such as defense cost, expenses incurred
providing first aid to others, damage to property of others and
loss assessment charges.
Medical Payments
This coverage will pay the necessary medical expense for
bodily injury of others. Coverage applies to accidents that
occur on the insured premises or any location when caused by
action of the insured. This coverage has a basic limit of $1,000
per person. The insured may select higher limits for an
additional premium.
Endorsements
Inflation Guard Endorsement
When this endorsement is added to the policy it increases
the limit of Coverage C and D. The insured selects the
percentage of increase for the year and limits are
automatically increased at certain dates throughout the year.
Earthquake Coverage Endorsement
Earthquake coverage is excluded under Section I of the
policy. Adding this endorsement removes the exclusion and adds
earthquake coverage which is subject to a deductible for each
coverage under Section I.
Scheduled Personal Property
The scheduled personal property endorsement is used to
provide coverage for risk of direct loss for such items as
jewelry, furs, cameras, musical instruments, silverware,
golfer's equipment, fine arts, postage stamps and rare coins.
Scheduled property can be insured for any amount the insured
requires.
Increase Special Limits
Certain types of personal property under Coverage C has
special limits of liability. Adding this endorsement increases
the special limit.
Building Additions/Alterations
The policy provides additional coverage for building
improvements or installations, made or acquired at the tenants
expense. The basic limit is 10% of Coverage C limit, adding
this endorsement increases the basic limit.
Water Bed Liability
This endorsement provides coverage for liability arising
out of an insured's ownership or use of a water bed on the
residence premises.
Deductible
The renter's policy has a standard deductible of $250. The
insured may reduce the deductible to $100 or increase it to
$500, $1,000 or $2,500.
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