What is HOA insurance?

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HOA insurance is a type of commercial property insurance paid through dues paid to the Homeowners Association (HOA). Covers physical damage to HOA-managed structures and common spaces, as well as certain liability costs.

What is HOA?

HOAs are membership organizations that operate for the benefit of the community, and residents pay membership fees in exchange for certain services. Run by a board of directors elected by community residents, the HOA ensures that common areas are maintained and enforces pledges to maintain the appearance of the community.

Detached house HOA

Single-family home HOAs aim to maintain the aesthetic appearance of the neighborhood. This is accomplished by charging homeowners dues to maintain common areas and by overseeing the operation and maintenance of shared community assets such as parks and pools.

HOAs in single-family residential areas may also have specific rules for members, such as requiring homeowners to have certain types of mailboxes, shingle shades, or paint colors on the exterior of their homes. there is.

Condo HOA

The Condo HOA is responsible for the maintenance and maintenance of the condo building and supervision of the common areas used by the condo residents. A condo HOA may also have its own set of rules regarding the use of public areas shared by the owner.

HOAs purchase insurance to cover repair costs for areas and buildings they manage, as well as liability protection for injuries that occur in common areas such as pools. HOA Board members process purchases of HOA insurance and pay premiums using funds from dues paid by members. HOA members have equal access to common areas and therefore pay an equal share of the HOA insurance policy.

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How does HOA insurance work?

HOA insurance (also known as master policy) provides coverage for liability and property damage that HOA must pay out of pocket.

For neighborhood HOAs, the general master policy covers shared property and neighborhood amenities managed by the HOA. This includes community pools, parks, playgrounds, ponds, gardens, clubhouses and fitness areas.

A typical condo HOA master policy covers everything outside the condo unit (including exterior walls and roofs) and common spaces such as stairwells, hallways, elevators and lobbies.

Condominium association master policies can be of one of two types:

“All-in” Mansion Master Policy

This more comprehensive policy covers building exteriors and some interior elements such as appliances, carpeting, plumbing and wiring. Personal items such as furniture and clothing are not covered.

“Exposed Wall” Mansion Master Policy

This type of policy only guarantees the bare construction of the condo building. Unit walls and personal items are not covered. Some bare policies include plumbing and electrical systems.

HOA insurance also covers injuries that occur in common areas. For example, if a parent sues the Homeowners Association for damages after a child breaks a leg on a community playground, the master policy covers her HOA legal defenses and settlements up to the policy limits. .

What does HOA insurance cover?

HOA insurance covers physical damage to structures and common areas managed by HOA and liability costs associated with these areas.

Physical damage compensation

Physical damage coverage is paid to repair or replace damage in public areas such as parks and playgrounds.

For condo HOAs, physical damage coverage also protects for damage to the exterior of the condo building (such as missing shingles) and to interior common building areas such as stairwells and basements.

HOA insurance typically covers damage caused by natural disasters, fire, storms and vandalism.

general responsibility

General Liability covers the HOA’s legal defense and settlement or judgment if someone sues after being injured in a common area. For example, if a guest slips and falls on an icy sidewalk in a neighborhood park, it can lead to a costly lawsuit.

With proper HOA insurance, the HOA does not have to impose heavy valuations on members to cover their costs.

What is not covered by HOA insurance?

HOA insurance does not cover property damage or liability for injuries that occur within your property, home or condominium. It also generally excludes coverage for damage caused by floods and earthquakes.

HOA insurance does not cover:

  • physical damage to your home
  • Physical damage to the interior of the condo
  • Damaged or stolen personal property
  • Physical damage to common areas due to earthquake
  • Liability costs incurred by you, such as damage caused by your child
  • Claims that exceed the limits of your HOA policy

HOA insurance also does not cover personal items if they are stolen in common areas. homeowners insurance Also apartment insurance for this coverage.

Similarly, if your car is stolen in a public pool parking lot, comprehensive car insurance for coverage.

Do I need HOA insurance?

Most HOAs are required by bylaw to have at least some insurance, and many states require HOA insurance. For example, Arizona requires the following requirements:

  • Property damage compensation for shared property of at least 80% of the value of the property
  • General liability insurance in an amount determined by the HOA Board

HOA insurance financially protects shared amenities and community properties from natural disasters, vandalism, and liability claims. Without it, HOA members could be held personally liable for damages related to their use of common areas. , provided that the HOA is adequately insured.

Members of the HOA Board should ensure that the Master Policy is fully covered. If your master policy has a flood exclusion, consider purchasing master flood insurance. If you are concerned about earthquakes in your area, consider purchasing earthquake insurance.

It is wise to review your HOA policy each year to see if any changes or coverage extensions are required.

HOA vs Condo or Homeowners Insurance

HOA insurance pays for property damage and liability costs shared by the community, while your own homeowners or condominium insurance pays for damage to your home and belongings. If you are sued for an accident that you are indebted to (even if the accident occurred in a common area), your policy also covers legal defense and settlement.

For example, HOA insurance covers the HOA’s legal defenses if someone sues after being injured at a community pool, but if someone sues you for being bitten by a dog at a community park, your Own homeowners insurance applies.

Traditional homeowners insurance also covers the repair and replacement of damage to your home, and the replacement of your personal property after a covered loss. If a tornado ravages your neighborhood and destroys your home and all your belongings, the structure of your home and your personal belongings will be covered by homeowners insurance. , to cover physical damage done to nearby shared structures.

For condominium owners, the HOA insurance master policy covers the exterior of the building and common areas. You will need your own condo insurance to protect the interior of your unit. Similar to homeowners insurance, condominium insurance covers personal property (furniture, clothing, TV, tableware, etc.) and provides liability insurance. It also provides coverage in the event of damage to the interior walls, such as in a fire.

Related insurance types

additional living expenses

It’s usually listed in the “loss of use” section of your home insurance policy. Additional cost of living coverage Pay to live elsewhere while your home or condo is being repaired for covered losses such as fires.

Damage assessment coverage

This optional coverage helps cover costs in situations not covered by condo HOA insurance. For example, a fire damaged an elevator in an apartment building, causing $350,000 worth of damage. If the HOA Master Policy coverage for building construction is $300,000, $50,000 remains uninsured. The condo HOA can split this remaining cost among the condo owners of the building. Damage assessment coverage We can pay for this extra cost so you don’t have to.

Coverage for medical expenses

This coverage pays for minor injuries that occur in your home or condo, regardless of who is at fault.limit of Coverage for medical expenses Usually between $1,000 and $5,000.

Related: What does homeowners insurance cover?

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