Don’t you know the difference between the insurance available for condominiums? Here we explain the master condominium policy and the HO6 policy.
If you own an apartment, it is likely that in the past few months, you have received and heard a lot of information about property insurance, specifically condominium insurance. You may have several questions, and we want to help you so you can understand a little better about this topic and how it can impact you.
Puerto Rico Condominium Law
There was recently an amendment to the Puerto Rico Condominium Law; it was effective last August 2020.
Among the most significant changes for the consumer is that the master policies of the condominiums acquired by the Owners’ Councils will be under the policy model called “Bare Wall.” A “Bare Wall” policy covers the exterior of the building and its communal areas. So now, the Owners’ Councils are no longer responsible for acquiring policies that protect the private property inside each apartment.
What does this mean?
Thousands of apartment owners in Puerto Rico will be forced to purchase an HO6 insurance policy or personal package for their private assets, especially if they have a mortgage since their mortgage bank will require the purchaser to cover their exposure as soon as their assets are proprietary. Each owner is responsible for managing their own insurance and for obtaining information on the correct values within their unit, for ensuring these values are correct in a policy under their name, to cover their insurable interest and that of the mortgagee with whom the property is as collateral under the mortgage loan.
At USIC, we recognize the importance of knowing the great differences that exist between a master condominium policy (acquired by the Owners Council) and an HO6 policy (for apartment owners); this will help you visualize the protection you need for your apartment and tranquility.
Differences between a master condominium policy and an HO6 policy
Master Policy
If you want to understand the difference between a condominium master policy and an HO6 policy, it is important to recognize that the first policy covers exterior damage, including common areas in the building, such as parking, sidewalks, garage, courts, and parks. Recreational. In addition, your coverage includes unexpected events such as fire, theft, vandalism, lightning, hurricanes, earthquakes, floods, among others.
HO6 Policy
By comparison, an HO6 policy protects damage that occurs within a unit. That is, the interior structure of the apartment, the personal property within it, improvements and alterations made to the unit, unexpected expenses caused by a peril that is within your coverage, and even personal liability and medical expenses for third parties. The events covered by this policy include damage caused by fire, earthquake, and hurricanes (additional coverage), among others.
As we mentioned before, prior to the condominium law, the choice to protect the exterior and the units inside the condominium was the task of its administration.
However, currently, the responsibility of choosing the insurance company that will protect their assets belongs to the owners or owners of apartments, regardless of whether the property is collateral for a mortgage loan or is paid off.
Master Policy vs. HO-6 Policy
Below is a comparative table between the protection provided by each of the insurances:
ProtectionMaster PolicyHO-6 Policy
What policy should I choose?
In the world of insurance, there are a variety of covers from which you can choose to protect your home. The most important thing is that you evaluate the alternatives on the market.
At USIC, we will allow you to protect your assets in the best way, and we invite you to review our personal property policies and their coverage when choosing the complete insurance. We can help you take care of your investment.