A condominium unit owner might ask, "Why should I purchase additional insurance when my condominium association already provides a master policy that protects my building?" In truth, condominium master policies do not completely protect unit owners from financial loss. A condominium association’s master policy covers the building, and in many cases, the walls and fixtures of individual units. Master policies do not cover unit owners’ personal property. A unit owner’s policy, known as an H06 in the insurance industry, provides coverage to unit owners for personal property, personal liability, and loss of use, all of which are necessary coverages to protect an owner from significant financial loss.
A condo owner can understand the importance of carrying an H06 policy by imagining this situation: Your neighbor’s unit upstairs catches on fire. His sprinklers extinguish the flames, but cause significant water damage to your ceiling in the process. While you watch your ceiling begin to droop, your toy poodle escapes into the hallway and bites a toddler. To make matters worse, the toddler’s mother threatens to sue you. Meanwhile, your unit is so badly damaged, that you are forced to live in a hotel while your unit is being repaired. Now, you have soggy furniture, an angry neighbor (who may sue you), and hotel bills to pay for on your own. An H06 policy will help you pay these bills up to the limits you have chosen. Your soggy furniture (personal property), legal bills (personal liability), and hotel stay (loss of use) would NOT be covered by your condominium’s master policy. While this specific situation is extreme, the example is designed to highlight the risks condo owners face. As a condo owner, purchasing a unit owner’s policy is the best way to protect yourself from crippling financial loss.