Buying a condo? Things just got a little more interesting. Lenders are now requiring an HO-6 Policy. I have asked my friend Terry Murphy at Allstate to be a guest blogger and here is what she provided.
Condo Insurance is very different from Renters Insurance. There's more you need to protect than just your possessions.
Most condominium associations insure the building's structure and common areas, but each unit's interior construction is the responsibility of the homeowner. If your condo is destroyed, it may be up to you to replace drywall, flooring, cabinets, lighting fixtures and so on. Prior to Fanniemae's updated policy that requires the borrower obtain "walls-in" coverage (commonly known as an HO-6 policy), the buyer only needed to show proof of a Master or Association policy. What this means to condo purchaser's--if you are obtaining lender financing, you will be required to obtain an HO-6 policy. (The only exception would be if the borrower is able to prove the Association Master Policy had coverage for the interiors of the units.) The HO-6 policy must provide coverage in an amount that is no less than 20% of the condominium unit's appraised value.
Some questions to ask before selecting your condo insurance:
- How much coverage does my condo association carry?
- What part of my condominium does my association not cover?
- What are my insurance responsibilities?
- How much would it cost to repair the inside of my condo if it were damaged?
- What kind of protection do I have against liability claims?
Coverage To Consider:
- Property Protection - You are responsible for covering everything inside your unit, including cabinetry and appliances.
- Guest Medical Protection - If someone inside your condo is accidentally injured, this coverage can provide payments for reasonable medical expenses.
- Liability Protection - This coverage helps protect you against the legal responsibility for an injury or property damage that you or anyone else insured under your policy may have caused to other people on or away from your property.
- Additional Living Expenses - If a covered loss (like a fire) makes your condo uninhabitable, this policy will cover the reasonable increase in expenses needed to maintain your normal standard of living for a certain amount of time.
- Loss Assessments Coverage - If your condominium association levies special assessments against you resulting from certain losses to your condominium complex, your policy will pay your share of such assessments up to the $1,000 coverage limit.
Terry MurphyWally Burbage & Associates, LLC Allstate Insurance Company 1655 Savannah Hwy., Suite B Charleston, SC 29407-2231 Bus: 843.766.1221 Fax: 843.556.4929 terrymurphy@allstate.com ~~I LOVE REFERRALS~~
;)
;)
The newest requirement of one lender is an HO6 that requires contents to be insured at the sales price. Still have not figured out the reason for that one.