I think there’s this mindset when they buy a condo that they’re not responsible for anything,” says Robert Masse of W.T. Phelan Insurance. As a quarter-century veteran of condo insurance, the Arlington, Massachusetts-based Masse has often seen the misunderstandings that surround the topic of HO-6 homeowner’s insurance.
“We get a lot of people who say, ‘My stuff’s really not worth much. I don’t want to buy an HO-6.’” Yet experts say such thinking entirely misses the point of proper condo homeowner coverage—insurance coverage that could prove crucial to both management and unit owners, if disaster strikes.
HO-6, the specific designation for homeowner’s coverage for condo properties, serves to insure the interior of an individual condo unit and the personal property contained therein. Mortgage holder requirements for this so-called “studs-in” coverage have grown more prevalent with the mortgage lender reforms of recent years. Yet, as experienced agents know, many unit owners not required to carry HO-6 have continued to shirk this crucial area of homeowner protection—a fact that can lead to frightful consequences for condo dwellers and community boards.
“They don’t think they need it,” says Brendon Kilcoyne, a Certified Insurance Counselor with the Watertown, Massachusetts agency H&K Insurance. “They assume their association has insurance, so they don’t need it.” It is this lack of up-front knowledge, particularly among first-time condo buyers, that insurance agents—as well as condo boards—must work hard to mitigate in the face of today’s changing housing market. “I find it mostly with homeowners who have moved from a single family home and are new to condo living,” says Jeffrey Grosser, vice president and principal of Rodman Insurance in Needham, Massachusetts. “And they wrongly believe everything they own is covered by the association policy.”
Deductibles Keep Rising
“The way condo insurance works,” Grosser explains,” is that, if I’m a unit owner, and I’m subject to damage as a part of a large claim, the association’s policy has a deductible. And I, as a unit owner, am responsible for absorbing my proportionate part of that deductible—if my unit is involved.” And such deductibles, say experts, are steadily climbing along with rising construction costs. “The master policy deductibles have been increasing, especially in the last ten years—up to five or ten thousand dollars. And the associations are increasingly accessing those deductibles.”