What Is the Difference Between an HO-3 Vs. HO-6 Insurance Policy?

The differences between an HO-3 and HO-6 homeowner’s insurance policy are the dwelling limit, other structure coverage and loss assessment coverage, writes Equifax. HO-3 policies are issued to an owner of a residential home, while HO-6 policies are issued to an owner of a condominium

The dwelling limit is one important difference between the policies, explains Equifax. In an HO-6 policy, the interior and exterior of the structure is covered, while in an HO-3 policy only the interior of the home is covered. The outside of the condo is insured by the association managing the property; the fees for the association’s insurance are typically passed back to the owners through the association fees. The coverage for additional structures, such as fences, mailboxes and parking, are covered by the association and not the HO-6 policy holder. An HO-3 policy includes additional structures as part of the overall home policy.

A condo policy typically has a clause for loss assessment, which covers the homeowner in the event the association’s insurance policy was not sufficient to cover a settlement, notes Equifax. In the event that this happens, an HO-6 policy covers the fees assessed to all of the owners through the association. Homeowners do not need this type of clause because the initial claim goes against the homeowner.