Homeowners 6 - Unit-Owners Form (HO 00 06)
1. What the form is
The Homeowners 6 (HO 00 06) form, often referred to as "walls-in" coverage, is specifically designed for owners of condominium units or cooperative apartments. Its primary purpose is to insure the parts of the unit that are the individual owner's responsibility, as defined by the condominium association's master deed or the co-op's proprietary lease. This typically includes the interior of the unit (such as drywall, flooring, and fixtures), any additions, alterations, or improvements made by the unit owner, and the owner's personal property. The HO 00 06 also provides personal liability coverage for the insured and medical payments to others. It is a "named perils" policy for personal property, meaning it only covers losses specifically listed in the policy (e.g., fire, theft, vandalism). Dwelling coverage (Coverage A) for the building and alterations is also on a named perils basis unless endorsed. The form is structured to complement the master insurance policy carried by the condominium association, which generally covers the common areas and the building's exterior.
2. Classes of business it applies to
The HO 00 06 is exclusively for residential condominium unit owners and cooperative apartment shareholders. It applies to situations where an individual owns a specific unit within a larger, multi-unit complex governed by an association. Real-world examples include:
- An individual purchasing a unit in a high-rise condominium building.
- A family buying into a cooperative housing project where they own shares entitling them to occupy a specific apartment.
- Someone owning a townhouse-style condominium where the exterior and common grounds are maintained by a homeowners association.
- Owners of condominium units that are used as primary residences, secondary homes, or are even held for rental to others (though specific endorsements like HO 17 33 may be needed if the unit is regularly rented).
The insured does not need to be an occupant of the unit to be eligible for an HO-6, though some specific coverages or endorsements might have occupancy requirements.
3. Special considerations
Several important factors must be considered when using the HO 00 06:
- Condominium Association Master Policy Review: It is crucial to meticulously review the condominium association's master policy to understand what it covers (e.g., "all-in," "bare walls," or "single entity" coverage). This helps determine the necessary Coverage A (Dwelling) limit on the HO 00 06 to avoid gaps or overlaps. For instance, if the master policy is "bare walls," the HO 00 06 needs to cover all interior elements, including drywall and original fixtures.
- Loss Assessment Coverage: Condominium associations can levy assessments against unit owners for damage to common areas that exceeds the master policy's limits or for deductibles. The HO 00 06 includes a base limit for loss assessment coverage (typically $1,000), but this can often be increased with an endorsement (e.g., HO 04 35). This is particularly important for associations with high deductibles or in catastrophe-prone areas.
- Ordinance or Law Coverage: This coverage, which addresses the increased costs of rebuilding due to stricter building codes after a loss, is an additional coverage in the HO 00 06. The standard limit may be insufficient for older buildings, and an endorsement (e.g., HO 04 77) might be necessary to increase this coverage.
- Named Perils Limitation: Coverage C (Personal Property) and typically Coverage A (Dwelling - Additions & Alterations) are on a named perils basis. This means if a cause of loss is not specifically listed, it's not covered. Unit owners desiring broader protection can often endorse the policy to provide "open perils" or "special perils" coverage for personal property and/or dwelling items.
- Definition of "Residence Premises": In the HO 00 06, "residence premises" specifically refers to the unit where the insured resides, as shown in the Declarations. This is a key distinction from other HO forms that might cover the entire dwelling structure.
- Rental Situations: If the unit owner rents the condo to others, standard HO 00 06 coverage for theft of certain personal property and liability may be limited or excluded. Endorsement HO 17 33 (Unit-Owners Rental to Others) should be considered to provide appropriate coverage.
- Vacanc_y vs. Unoccupancy:_ The peril of vandalism coverage is precluded if the building containing the residence premises has been vacant for more than 60 consecutive days, not just the insured's unit. For freezing losses, if the unit is "unoccupied" and the insured hasn't taken reasonable care to maintain heat or shut off water, coverage may be denied.
4. Key information for agents and underwriters
Agents and underwriters should pay close attention to the following when dealing with the HO 00 06:
- Determining Coverage A Adequacy: The most critical underwriting aspect is ensuring the Coverage A limit is sufficient. This requires understanding the association's master policy and the extent of the unit owner's responsibility for interior finishes, additions, and alterations. Over-insuring can lead to unnecessary premium, while under-insuring can result in significant out-of-pocket expenses for the insured at the time of a loss.
- Loss History: Underwriting guidelines often scrutinize the applicant's loss history. Some insurers may decline coverage or offer a more restrictive form (like an HO 00 08, if available for condos) if there have been multiple recent losses.
- Risk Assessment of Common Areas: While the HO 00 06 doesn't directly insure common areas, the condition and management of the condominium complex can impact the likelihood of losses affecting individual units (e.g., water damage from a common pipe, fire spreading from another unit or common area).
- Importance of Endorsements: Agents should proactively discuss optional endorsements to broaden coverage, such as:
- Special Personal Property Coverage: To change personal property from named perils to open perils.
- Increased Loss Assessment Coverage (HO 04 35).
- Ordinance or Law Increased Amount of Coverage (HO 04 77).
- Unit-Owners Rental to Others (HO 17 33) if the unit is rented out.
- Water Back-up and Sump Discharge or Overflow: Often excluded or limited, this endorsement provides crucial coverage for a common source of loss.
- Understanding "Improvements and Betterments": The policy covers alterations, appliances, fixtures, and improvements that are part of the building and made or acquired at the unit owner's expense. Accurately valuing these is key for Coverage A.
- Coordinating with Master Policy Deductibles: The unit owner may be responsible for a portion of the master policy deductible. The HO 00 06, particularly with loss assessment coverage, can help address this exposure.
- HO DS 06 (Homeowners Declarations): While not a coverage form itself, the HO DS 06 is the declarations page that would accompany the HO 00 06. It will list the named insured, property address, policy period, coverage limits for Coverages A, C, D (Loss of Use), E (Personal Liability), F (Medical Payments to Others), chosen deductibles, and any attached endorsements. It personalizes the HO 00 06 policy to the specific insured and risk.
- Loss of Use (Coverage D): This coverage in the HO 00 06 can apply if a covered loss to the unit or the building containing the property makes the unit unfit to live in. This is broader than some other HO forms where damage must be to the insured's specific part of the premises. The limit for Coverage D in an HO 00 06 is typically 50% of Coverage C (Personal Property).