Condo insurance or an HO6 insurance policy bridges the gap in coverage between a condo association’s master insurance policy and the owner’s property (furnishings, fixture and personal items) and personal liability protection.  If you are acquiring a mortgage in order to purchase a villa on Hilton Head Island, your mortgage lender will most likely require you to purchase this policy.

How an H06 value is determined

FNMA requires borrowers to carry an HO-6 Policy that is based on either 100% replacement cost of all better-ments and improvements from the walls in as determined by their insurance company, or 20% of the appraised value of the unit. Our general consensus is that insurance companies won’t want to be the ones to determine the 100% replacement cost so the default will probably end up being the 20% of the appraised value. (see bottom of page 1 and top of page 3 for the reference to these items).