A client has an HO-6 Unit-Owners Form policy for their condominium unit. A pipe bursts within their unit's walls, causing $15,000 in damage to their personal belongings and $5,000 in damage to the drywall and flooring within their unit. The master condominium association policy covers the 'bare walls in' structure. How would the HO-6 policy typically respond to this loss, assuming a $1,000 deductible?
- AThe HO-6 policy would only pay for the damage to personal belongings, totaling $14,000 after the deductible.
- BThe master condominium policy would cover all structural damage, and the HO-6 would cover personal belongings.
- CThe loss would be denied as the master policy should cover all damage within the unit, regardless of cause.
- DThe HO-6 policy would pay $19,000, covering both personal belongings and the unit's interior structure.
Show answer & explanationAnswer & explanation
Correct answer: D. The HO-6 policy would pay $19,000, covering both personal belongings and the unit's interior structure.
An HO-6 policy covers personal property (Coverage C) and, importantly, improvements and betterments or building property (Coverage A) within the unit that the unit-owner is responsible for. Since the master policy is 'bare walls in', the unit owner is responsible for drywall and flooring. Thus, both personal property and the unit's interior structure are covered.
Why the other options are wrong
- A. This is incorrect because HO-6 also covers the interior structure of the unit for which the owner is responsible.
- B. The master policy being 'bare walls in' means it stops at the unfinished interior surface of the perimeter walls. The unit owner's HO-6 is responsible for the finished drywall and flooring.
- C. The master policy's coverage type ('bare walls in') dictates what the unit owner's HO-6 must cover regarding the unit's interior structure.
HO-6 Unit-Owners Form (Coverage A)
Under an HO-6 policy, Coverage A (Dwelling) is specifically designed to cover the parts of the condominium unit for which the unit-owner is responsible, such as alterations, appliances, fixtures, and improvements, which are not covered by the master association policy.
- Coverage A applies to the interior structure of the unit.
- The scope of Coverage A depends on the master policy's coverage type ('bare walls in', 'single entity', 'all-in').
- Often includes improvements and betterments made by the unit owner.
Memory trick: HO-6 covers *your* stuff and *your* walls inside the condo.