A homeowners association (HOA) is an organization that provides governance and services to homeowners or condominium owners within the HOA. In most HOAs, the homeowners have the right to use space that the HOA owns or maintains for the benefit of all of the HOA members. That shared space is also known as the HOA’s common areas. The HOA, not the individual homeowners, is responsible for maintaining the common areas in a manner that is consistent with the HOA documents.
No matter how well the HOA maintains its common areas, accidents involving serious injuries and damage to property can occur in the common areas. In many such cases, the HOA will be held liable.
The Basics Of HOA Insurance
HOA insurance is important when someone is injured while using the common area or damages the HOA property. HOA insurance is designed to protect the HOA and its members from paying for damages and the costs of repair out of their own pockets. Without HOA insurance, that is precisely what could happen– each member would be responsible for paying their share of the costs.
HOA insurance is provided under what is called a master policy which covers the common areas of the HOA. Your HOA documents will outline exactly what space is designated a common area. Some typical examples of HOA common areas include:
- Sidewalks and pathways
- Swimming pools
- Tennis courts
- Parking lots
- Golf course
In a condo or co-op HOA, the common areas likely also include the building structure, roof, hallways, meeting rooms and mailbox areas. Condo owners should review the HOA’s master policy before taking out a personal condo policy; it will be redundant to insure anything that is already covered by your HOA’s master policy.
The cost of HOA insurance is included as part of the monthly HOA dues paid by each member.
Risks Covered by HOA Insurance
General Liability and Property
The master policy is fundamentally a general liability insurance policy. It protects the HOA against liability for injuries suffered by an individual(s) using a common area.
The master policy also insures damage to HOA buildings and property in the common area.
In a condo HOA, the master policy covers damage to the structure of the condo building. In contrast, for a single-family home in an HOA, the HOA insurance does not cover a single-family home because it is not considered a common area. In those cases, the homeowner’s personal insurance policy covers damage to the home.
In a condo HOA, the master policy will specify what type of coverage it provides. It will likely consist of one of two different types of condo insurance:
- Bare walls-in: A bare walls-in master policy covers only the structure of the condo. That coverage would include the drywall and all of the structure found behind the condo walls, including the framing, wiring, plumbing and insulation.
- All-in: An all-in policy covers everything that a bare walls-in policy covers, and also covers the condo’s fixtures. Examples of fixtures are countertops, sinks, built-in appliances and anything that you cannot take with you when you move.
Renovations that you do to your condo may not be covered by the all-in coverage. You may need supplemental dwelling coverage, but you should consult with your insurance agent to determine what additional coverage you may need.
HOA insurance does not cover your personal property or contents in your home or condo. This is true whether you own a single-family home in an HOA or a condo in a condo HOA. Homeowners and condo owners are solely responsible for their personal items. You may want to consider insuring your personal belongings at the replacement cost.
Loss Assessment Coverage
Your HOA’s master policy will have coverage limits. For any incident, once the coverage limit is reached on a single claim, the homeowners’ are personally liable for paying the amounts over the master policy coverage limit. Homeowners can protect themselves against that risk by purchasing loss assessment coverage.
Consider whether your HOA’s master policy coverage limits are reasonable in light of the common areas it maintains. If you are in a large HOA with many amenities such as swimming pools and private roads, or you live in a large condo complex with many adjoining rooftops, consider what type of damage could occur. Extremely serious injuries occur in swimming pool accidents, motor vehicle accidents and building fires. You may need loss assessment coverage to protect yourself against the risk that someone suffers a catastrophic injury that exceeds the HOA’s master policy coverage limits.
Contact The HOA Insurance Experts At Pro Insurance Group
If you are unsure whether you have enough insurance to protect you against the risks associated with your HOA, speak to one of the insurance agents at Pro Insurance Group. They can review your existing coverage and help you decide whether additional coverage would be prudent in light of your circumstances. Contact them for more information about coverage and their competitive rates.