What Is HOA Insurance?

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HOA Insurance Explained

HOA members pay dues for maintaining and improving community areas, security, trash and snow removal services, and more. Another expense covered by dues and fees includes HOA insurance.

HOA insurance is a form of commercial property insurance that covers the exterior and common areas belonging to the HOA. While homeowners have their own insurance, they’re also expected to share in the cost of the HOA’s master insurance policy.

How HOA Insurance Works

Usually, as part of overall fees, HOA members contribute equally toward the HOA master policy. If a shared area of the HOA such as the pool area, a gym, clubhouse, or other shared structure suffers damaged by something covered in the insurance agreement—such as fire, flood, or excessive wind—the HOA master policy covers the repairs. As for deductibles, that would depend on the HOA, the policy details, and the extent of the damage.

Whether or not HOA members use all the shared areas and amenities, they must pay their share of the HOA insurance policy. Similarly, HOA members, regardless of how much they use common areas, are also not exempt from insurance claim expenses related to common areas.

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What Does HOA Insurance Cover?

Many HOAs carry what’s known as a “master policy.” An HOA master policy typically provides coverage for damage to common areas and personal injuries incurred there.

Common Area Damage

The master policy should cover damage to shared spaces on the grounds of the HOA, such as lobbies, stairways, elevators, basements, roofs, common walls, gyms, playgrounds, clubhouses, pools, and other water features. Usually, any place accessible to HOA members would be considered a common area. Examine the HOA’s governing documents to see exactly which areas the HOA master policy insures.

Typically, covered damage could include wind, fire, flood, vandalism, or other criminal activity. It’s essential, however, to take note of any exclusions in the HOA master policy. For instance, because flooding is one of the most common natural disasters in the U.S., it is often necessary to purchase flood insurance separately.

Liability Insurance

Additionally, an HOA should also obtain general liability insurance to cover the costs of lawsuits filed by people injured in the HOA’s common areas.

For instance, suppose a visitor slips on ice on a common pathway or is injured at the pool or gym. The injured person can sue for medical expenses and could win a significant amount of money. However, if your HOA insurance lacks liability coverage, responsibility for payment may fall on the individual homeowners.

In addition, an HOA’s liability insurance should include “directors and officers” coverage. This could be useful if someone sustains loss or damage due to HOA mismanagement of funds or general negligence.

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What About Accidents In Someone’s Home?

An HOA master policy will probably not cover any accidental injury to someone on an individual homeowner’s property. For that reason, it would be a good idea to ensure you have liability coverage in your home insurance policy in the event of an incident.

HOA Insurance and Homeowners Insurance

For those who are members of an HOA made up of single-family residences or subdivisions, there will likely be not much difference between your home insurance now versus what it would be if you didn’t belong to an HOA.

In general, HOA insurance coverage doesn’t extend to one’s home. That said, there are three essential things to consider when getting homeowners insurance for a home in an HOA:

  1. The insurance company may offer an HOA discount for members. This is often because many HOA communities are gated or have some form of extra security, making these homes less likely to be broken into or experience vandalism.
  2. An HOA master policy may provide a limited amount of liability insurance for accidents in community areas. However, once that master policy reaches its limit, personal home insurance may need to pick up the rest of the claim.
  3. Similarly, the bank may require that the homeowner acquire loss assessment coverage to pay for property losses to common areas should the HOA master policy reach its coverage limit.

Learn More About HOA Insurance

If you have further questions about HOA insurance and how it works with homeowners insurance, give Henderson Association Management a call. We can help you find the best answers to any questions about coverage for physical damage and liability for your HOA and home.

So give us a call today! 704-970-4155