Condominiums are a popular choice for many people moving to Hawaii. If a condo is in your Hawaii relocation plan, we’ll show you everything you need to know about buying condo insurance, also known as HO-6 insurance. This insurance coverage is both important for protecting your new investment and, in many cases, it’s also required. 

What makes a condo such an attractive purchase for so many Hawaii residents? In Hawaii, where the typical home value is $809,570, according to Zillow,i a condo can be a more affordable choice. Additionally, landscaping and outdoor maintenance are taken care of by the condo association. Some condos even come with amenities, like access to a gym and a pool. Finally, condos are often located in bustling, lively areas with plenty of things to do, which can be appealing to many. 

If you’re considering a condo in Hawaii, you’ll also need to consider condo insurance. In some cases, you’ll be required to purchase this coverage, either by your condo association or your lender. Even if it’s not a requirement, condo insurance is important protection for your unit and its contents. After all, even though your condo association will likely have what’s called a “master policy” to cover the overall complex, this policy doesn’t protect you against loss from certain types of damages that may occur to your unit. 

In this article, we’ll walk you through everything you need to know about Hawaii condo insurance, including: 

  • What is condo insurance (or HO-6 insurance)?  
  • Why do owners need condo insurance? 
  • What’s covered in a condo association’s master policy? 
  • What’s covered in a standard condo insurance policy?  
  • What other coverage should I ask about for Hawaii condos? 
  • What’s the best way to shop for condo insurance coverage? 

Let’s start with the fundamentals. 

What Is Condo Insurance?  

In some ways, condo insurance policies are pretty similar to homeowners’ policies. However, because condominium arrangements involve individually-owned units as well as shared structures and areas, there are two types of insurance policies that cover condominiums: 

Condo Master Policy

Condo associations purchase condominium master policies to cover the structure of the condo building(s) and the common areas of the property. Some condo master policies also cover certain aspects of the individual condo units as well. We’ll talk about the three different types of master policies in a moment. 

Condo Insurance / HO-6 Insurance

Condominium insurance, or HO-6 insurance, ideally picks up where the condo master policies ends, offering coverage to individual owners for belongings and assets inside their units. Condo insurance policies may include coverage for personal property, permanent fixtures, liability in case someone gets injured in your apartment, loss of use if your apartment is uninhabitable, and more. We’ll run down a full list in the next section. 

Why Do Condo Owners Need Condo Insurance?

Plainly, the association’s master policy doesn’t cover a number of aspects of the interior of your unit. For example, let’s say there’s a fire at your complex. It destroys a number of your belongings, and you’re forced to move out for a few weeks while your unit is repaired.

  • Your association’s master policy may cover things like fixing any structural damage to the building or repainting and repairing hallways damaged by smoke and water.
  • However, the master policy won’t cover items such as 1) damage to your property or 2) the expenses involved with living elsewhere for a few weeks. Condo insurance, however, would likely cover you for those losses.

Additionally, you may simply be required to purchase condo insurance by:

  • Your condo association – Many condo associations require their owners to purchase an HO-6 insurance policy. Your condo agreement will likely specify the minimum requirements for this coverage.
  • Your lender – If you’re taking out a mortgage to pay for your condo, the lender will often require the borrower to purchase an HO-6 policy. They also may have specific requirements as to the coverage you choose.

Now, you have an overview of what condo insurance is, how it’s different from the condo master policy, and why you might need it. Next, let’s take a deeper dive into which policies cover what. It’s important to understand each type of coverage to prevent gaps that leave you unprotected in case of an incident.

Condo Master Policies: What Do They Cover? 

Although you’ll have little control over the master policy your condo association purchases, it’s important to understand what it covers. That way, you’ll know exactly what kind of coverage you’ll need for your own condo insurance policy. 

As we mentioned earlier, a master policy generally covers the structure of the building and the common areas, including things like: 

  • Exterior building damage, 
  • Damage to common areas like the pool, hallways, lobby, elevator, parking area, etc., and 
  • Liability for injuries in the common areas, such as if someone trips on a large crack in an exterior sidewalk that has sat unrepaired for several months. 

However, the exact coverage will depend on the policy that your association has chosen. Condo master policies generally come in three different types: 

Bare Walls Coverage

Bare walls coverage is pretty much exactly what it sounds like. In addition to covering the building structure and common areas, it only covers the bare walls, floors, and ceilings of your unit. Anything attached to those walls, floors, and ceilings are your responsibility. That includes carpet/flooring, fixtures, cabinets, etc.—as well as, of course, all of your belongings inside your unit. 

Single Entity Coverage

Single entity coverage goes a little farther than bare walls coverage by insuring the original fixtures in the units. However, if you’ve made any improvements—such as installing new track lighting—they wouldn’t be covered by this type of policy. By the way, you’ll find that single entity is one of the more common coverages selected by condo associations in Hawaii.  

All-Inclusive Coverage / All-In Coverage

Finally, all-inclusive coverage is the most comprehensive of all of the master policies. It  covers everything built into your unit, including things like fixtures, appliances, and cabinets.  

If your condo association has purchased all-inclusive coverage, you might not need dwelling coverage on your HO-6 policy. (More on that in a moment!) However, it’s always a good idea to ask an insurance agent before eliminating coverages from your policy. 

Now that you understand what might be included in a master policy, let’s talk about your condo insurance policy and what it can cover. 

Condo Insurance Policies: What Do They Cover? 

Your condo’s master policy will cover the shared areas (as well as certain aspects of your unit, as we noted above). Your HO-6 policy will cover what’s inside your unit—as well as the things that happen inside your unit, too. Common coverage you’ll see in a condo insurance policy include: 

Dwelling Coverage

If your association has purchased a bare walls or single entity coverage, dwelling coverage takes over where those policies leave off. Dwelling coverage includes things fixed to your walls, floors, and ceilings, such as carpets/flooring, lighting fixtures, cabinets, countertops, and more. 

Personal Property Coverage

As the name implies, personal property coverage includes all your personal belongings in your unit. You might also think of this as coverage for the things not attached to your walls—clothing, furniture, etc. 

Loss of Use Coverage

Remember our example about the fire in your condo? If your unit is damaged and uninhabitable, loss of use coverage will pay for alternative housing until you can return to your unit. 

Personal Liability Coverage

If negligence on your part causes injury to a visitor or damage to their possessions while in your unit, personal liability coverage will protect you against claims, up to the limits on the policy. 

Loss Assessment Coverage

In certain cases, a condo association may choose to pass damages on to residents. For example, if you were the cause of the fire that we used in our example, your condo association may hold you responsible for their policy’s deductible. Or, if something happens in a common area and the damages exceed the master policy’s limit, the association may spread the additional cost amongst the condo owners. Loss assessment coverage will kick in in these circumstances. 

Although these are the most common types of coverage included in a condo insurance policy, there are a few others you may want to ask about. 

Additional Coverage to Consider 

Depending on your circumstances—and your risk tolerance—you may also want to consider customizing your condo insurance policy with these additional coverages: 

  • Hurricane coverage: Although living in Hawaii isn’t quite the same as living in Hurricane Alley in the Caribbean, the state has had its share of big storms. Talk to your insurance agent to decide if this kind of coverage is right for you. 
  • Replacement cost coverage: In a standard insurance policy, damaged personal property is reimbursed at the “actual cash value,” which means you receive a depreciated value for older items. In other words, you’re not going to get the price you paid for that TV five years ago. You’re going to get its current value. If you choose replacement coverage, you’ll be reimbursed for the cost of replacing your damaged items with brand new ones. 
  • Scheduled personal property: This is a fancy term the insurance industry uses to describe coverage for expensive items. Personal property generally comes with a total limit for reimbursement, as well as an individual limit for certain types of items. In other words, you might have $50,000 of personal property coverage, but a you’re only covered for jewelry up to $2,000. If you have a $10,000 heirloom diamond necklace, you’d want to purchase coverage specifically for this piece. That falls under scheduled personal property. Bottom line: If you have some serious valuables, including jewelry and art, talk to your insurance agent about covering them specifically. 
  • Vacant condo coverage: If you’re planning on leaving your condo vacant for more than 30–60 days at a time, your policy may not cover your condo. If you’re planning on, say, spending the summer on the mainland, make sure you tell your insurance agent so you can be covered in this instance. 

What’s the Best Way to Shop for Coverage? 

You’ll find a number of providers for condo insurance in Hawaii, each of whom offer different coverage with different deductibles and limits. Before you buy coverage: 

  • Get three different quotes – Just as we recommend for vetting moving companies, we also recommend getting three different quotes before choosing one company. This will give you a good sense of the going rate for coverage in your area.  
  • Talk to an insurance agent – You’ll find plenty of online providers, but you might also find it helpful to talk through your options with a live person. Coverage can get complicated quickly, and insurance agents are often able to offer you simple, easy explanations. They can also help you customize your coverage to eliminate any potential gaps between your policy and the condo master policy. 
  • Check with your car insurance provider – Some insurers offer discounts when you bundle condo and car insurance. 
  • Don’t just look at cost alone – Not all coverage is created equal. Look at the deductible you’re being offered—i.e., what you have to pay before insurance kicks in. Additionally, look at your coverage limits, and make sure you understand what’s covered and what’s not before purchasing your policy. 

The Coverage and Protection You Need 

Purchasing a condo in Hawaii is a big step. As with all of your investments, it pays to protect it in case of the unexpected. By understanding your association’s master policy, as well as what kind of coverage you need, you’ll be able to purchase your condo insurance with confidence. Plus, knowing that you’re protected can offer you significant peace of mind when it comes to making your condo purchase. 

Need some help moving into your condo in Hawaii? With teams and warehouses on all four major Hawaiian Islands, we’re ready (and happy!) to assist. Just reach out to us for a free quote to get started.  

 

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