Topics covered: Unique insurance needs Introduction of form HO 00 06 Similar to broad form HO 00 02 Coverage A—dwelling Coverage C—personal property Coverage D—loss of use Additional coverages What areas comprise the “residence premises”? Named perils Endorsements for open perils coverage Other endorsements Other insurance

Unique Insurance Needs

The condominium method of realty ownership involves a number of unique insurance problems. The condominium is a joint enterprise type of ownership in which there is common ownership of certain portions of the premises. The individual also has exclusive ownership of the right to occupy a specific unit, and frequently also individually owns certain items of physical property within the unit.

The ownership deed for a condominium—usually called the condominium declaration or sometimes the master deed—sets forth the exact provisions of ownership and rights of occupancy of all the unit owners. It usually provides for the establishment of a condominium association, made up of all the unit owners, with membership in the association a mandatory condition of condominium ownership. The association, working through elected officers and a board of directors, provides for the management of the condominium, including purchase of insurance on behalf of the unit owners in common.

The condominium declaration usually contains a section relating to insurance requirements (or this is sometimes found in the condominium association bylaws). This section describes what insurance will be carried by the association on behalf of the unit owners in common. It usually requires that the association purchase insurance on all the common property. In many cases, the association is also assigned the responsibility for insuring all the realty, including portions solely owned by the individual unit owners. Any property not insured by the association is the responsibility of the individual unit owners to insure.

The homeowners program provides the vehicle for covering residential condominium property. Commercial property forms are used to insure the common property. (See Condominium Association Coverage Form.)

Introduction of Form

HO 00 06 10 00

The insurance needs of residential condominium unit owners, while generally similar in most respects to the needs of other apartment dwellers, are sufficiently different that it was found desirable to provide a separate form of property and liability insurance designed specially for condominium unit owners. A form designed specifically for unit owners was first introduced by ISO in 1974. This was the HO-6 form (given its present designation, HO 00 06, under the revised numbering system of the 1991 homeowners program). Before 1974, the contents broad form HO-4 (now HO 00 04 10 00) was the only ISO form available to cover unit owners. A specific form for unit owners was required because the HO-4 form had several deficiencies when used for this purpose, particularly in the area of coverage for the unit owner's interest in the realty comprising the individual unit.

The 1984 homeowners program changed the general rules and the name of the HO-6 form (from “condominium unit-owners form” to “unit-owners form”) to allow its usage for cooperative apartments as well as condominiums. It might be noted that reference to a cooperative apartment tenant as a unit owner is not technically correct—the tenant does not own the unit as does a condominium owner. Instead, a cooperative tenant has an ownership interest in the cooperative association or corporation that owns all of the units, and through that ownership has a right to a perpetual lease to occupy a specific unit. However, this difference has not caused any problem in interpreting the intent of the coverage with respect to a resident of a cooperative apartment covered by form HO 00 06.