Usually, your homeowners association insurance will cover some portion of rebuild costs on your condo or townhome. However, you need to buy an HO6 policy to further protect yourself. This type of insurance provides additional coverage that is specific to your unit instead of the whole association.

Special Assessment Coverage

The HO6 policy will provide all kinds of different protections such as coverage for special assessment losses. So, if there’s a hailstorm like we had recently in Colorado Springs, and a lot of damage to the complex, the HOA should cover it. But, if there aren’t enough reserves to pay for the deductible, they’ll do what’s called a special assessment, in which every owner in the HOA is billed a certain amount of money to cover the cost of the deductible or the repairs. I’ve seen special assessment costs from $400 to $20,000, so it’s hard to gauge what is going to happen or when it’s going to happen. That’s the benefit of the HO6 coverage. It provides reimbursement for special assessment fees.  

Rental Home Insurance

If there is something that happens within the walls of your unit, the HOA won’t cover that. They cover from the walls out, so this policy will give you additional coverage inside your unit. An HO6 policy is not all that expensive, so contact an insurance company in your area that’s experienced in this type of insurance, and make sure you buy enough. I recently talked to a landlord who didn’t have HO6 insurance. He lost $5,000, and sometimes you can lose a lot of money on multiple properties. So when you’re trying to keep your bottom line low, you want to make sure you have the right insurance.

Insurance coverage is different in condos and townhomes than it is in single family homes. If you have any questions about HO6 coverage or Colorado Springs property management, please contact us at Muldoon Associates.