Condo Media - January 2017 - 18

Asked & Answered

Insurance Information
Conveying the Importance of HO6 Policies

Q
A

An informal poll of owners in our community found
that fewer than half of them have purchased HO6
policies for their units. What can the board do to
convey the importance of this coverage and should
we even try? If owners refuse to protect themselves,
why should the board care?

We'll answer the last question first. The HO6 policy,
as you know, covers the owner's personal possessions
and damage to the owner's unit that is not covered by
the association's master policy. If an uninsured owner
lacks the resources to make essential repairs, damage
to the owner's unit (mold, for example) could spread to
other units and common areas.
The HO6 policy also covers an owner's share of a
special assessment needed if the association's insurance falls short of what is needed to cover damage to
the community. If some owners can't cover their share
of the repairs, the burden will fall on other owners
to fill that gap. Additionally, and crucially, the owners' HO6 policy covers the master policy deductible,
for which an owner would be responsible, or partly
responsible, if a claim is triggered by damage only to
that owner's unit or a few units. Most of the insurancerelated disputes with owners involve responsibility for
paying the deductible. Those disputes would disappear
if owners had the coverage they need.
How can the board explain this to owners, and make
sure they get the message? Gregory Pierce, LIA, CPA,
vice president and director of business development for
NorthStar Insurance Services, Inc., has a few suggestions:
Ask the association's insurance agent to attend an annual meeting at which he/she can explain the association's
master policy, address insurance concerns (including
the importance of the HO6 policy), and answer owners'
questions. A group meeting "takes the onus off of board
members and managers to explain highly technical issues," Pierce says, "and it's an efficient way of conveying
information," because owners hear answers to many
questions-not just to their own.
Draft a letter to owners explaining the master policy cov-

18

CONDOMEDIA

erage, how it meshes, or should mesh, with the owner's
HO6 policy, and how responsibility for the deductible is
allocated. The letter should make it clear that purchasing
the insurance is an obligation of ownership, Pierce says.
Explain the need for an HO6 policy, and the risks
owners incur by failing to have that coverage, in
concrete terms. Note, for example, that if the master
policy pays for $10,000 in damage to the owner's
unit, the owner will have to cover the deductible,
which could easily equal or exceed that amount. "I
don't know many people who'd be happy about writing a check of that size," Pierce says.
Don't rely on one form of communication to convey
insurance information. "Take advantage of all available communication channels," Pierce advises.
Post the master policy declaration (summarizing the
coverage) on the association's website, along with the
general information letter to owners explaining the
need for the HO6 policy.
Send periodic reminders about HO6 policies and
insurance coverage generally in e-mail messages and
newsletters.
Encourage owners to contact board members or the
association manager if they have insurance questions.
"I'll answer questions from owners, in limited cases"
Pierce says, "but it's better if the questions are channeled through the manager or the board."



Condo Media - January 2017

Table of Contents for the Digital Edition of Condo Media - January 2017

Table of Contents
Condo Media - January 2017 - Intro
Condo Media - January 2017 - BB3
Condo Media - January 2017 - BB4
Condo Media - January 2017 - Cover1
Condo Media - January 2017 - Cover2
Condo Media - January 2017 - Table of Contents
Condo Media - January 2017 - 2
Condo Media - January 2017 - 3
Condo Media - January 2017 - 4
Condo Media - January 2017 - 5
Condo Media - January 2017 - 6
Condo Media - January 2017 - 7
Condo Media - January 2017 - 8
Condo Media - January 2017 - 9
Condo Media - January 2017 - 10
Condo Media - January 2017 - 11
Condo Media - January 2017 - 12
Condo Media - January 2017 - 13
Condo Media - January 2017 - 14
Condo Media - January 2017 - 15
Condo Media - January 2017 - 16
Condo Media - January 2017 - 17
Condo Media - January 2017 - 18
Condo Media - January 2017 - 19
Condo Media - January 2017 - 20
Condo Media - January 2017 - 21
Condo Media - January 2017 - 22
Condo Media - January 2017 - 23
Condo Media - January 2017 - 24
Condo Media - January 2017 - 25
Condo Media - January 2017 - 26
Condo Media - January 2017 - 27
Condo Media - January 2017 - 28
Condo Media - January 2017 - 29
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Condo Media - January 2017 - 34
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Condo Media - January 2017 - 37
Condo Media - January 2017 - 38
Condo Media - January 2017 - 39
Condo Media - January 2017 - 40
Condo Media - January 2017 - 41
Condo Media - January 2017 - 42
Condo Media - January 2017 - 43
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Condo Media - January 2017 - 56
Condo Media - January 2017 - 57
Condo Media - January 2017 - 58
Condo Media - January 2017 - 59
Condo Media - January 2017 - 60
Condo Media - January 2017 - 61
Condo Media - January 2017 - 62
Condo Media - January 2017 - 63
Condo Media - January 2017 - 64
Condo Media - January 2017 - Cover3
Condo Media - January 2017 - Cover4
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