Do you seek an insurance policy that covers physical damage to structures and other facilities in the community? Then, you should consider HOA insurance.
This type of insurance is typically designed to cover the cost associated with physical damages to properties and structures through your homeowners association.
With an HOA policy, you need not worry about the liability expenses and cost of fixing or replacing damaged equipment and structures in the area you reside; this policy already has you covered.
What is HOA insurance?
HOA insurance, otherwise known as a master policy, is a type of insurance that offers protection for property and liability damage to the structures of the home. Rather than the HOA paying for the cost out of pocket, HOA insurance covers all expenses related to fixing the damaged structures and other items.
A condo HOA master policy typically covers all structures outside of the condo unit, for example, the roof, exterior walls, staircase, elevators, hallways, and the building itself. On the other hand, neighborhood HOA master policy covers the amenities and shared assets that are managed by the HOA, such as playgrounds, ponds, parks, fitness areas, and pools.
What Does HOA Mean?
Typically, an HOA is a membership institution that is designed to protect the interests of its members. The members of this organization work hand-in-glove for the benefit of the community.
Residents of the community pay a specific number of dues in return for some services that are beneficial to their daily living. In essence, an HOA preserves the wellness of the community and helps to improve the standard of living of its members.
What Does HOA Insurance Cover?
Generally, an HOA insurance policy provides optimum protection in the event of physical damage to the structures and common areas managed by the HOA. An HOA policy covers:
- Physical damage: It provides coverage for damages done to the structures, equipment, and other areas in the community, such as parks, gardens, and playgrounds. HOA insurance also covers damage caused by fire, vandalism, storms, and any other natural disasters.
- General liability: In the event of being sued because of an injury, an HOA insurance policy covers the legal defense cost and settlement fee. For instance, if a guest trips and falls on a slippery flaw and sues you, you can file a claim for protection.
It is advisable to purchase a substantial amount of coverage under your HOA policy for guaranteed protection. Having the right amount of coverage prevents the financial burden of having to cover the cost of repairs out of pocket.
What Does HOA Insurance Not Cover?
Although HOA insurance policy offers coverage for damaged structures and other properties, it does not cover:
- Property damage or liability as a result of injuring someone in your house or condo.
- Earthquakes and floods.
- Physical damage to your house.
- Claims that are beyond the limit of your policy.
- Liability expenses you are deemed responsible for, like childcare.
- Damaged or stolen belongings.
In the event of theft of your personal belongings, you will need to refer to your homeowners insurance policy for coverage. When buying an HOA policy, it is essential to read the blue prints of the policy in order to get a better understanding of how it works, what it covers, and the policy limitations.
Is HOA Insurance Worth It?
Yes, we highly recommend HOA coverage to those who share amenities and property with other people living in a community.
There are certain states that mandate HOA insurance, such as Arizona. However, most states require HOAs to carry a minimum amount of insurance to protect them against certain perils.
This type of insurance policy offers coverage for liability claims, fire, disasters, acts of vandalism, and other perils included in your policy.
Without HOA insurance in place, members of the association will have to pay out of pocket the expenses associated with the cost of repairing damaged structures in common areas.
It is an ideal option to review your HOA policy alongside other members to determine if you need to increase the coverage amount or make some changes to the policy.
HOA vs. Homeowners or Condo Insurance
You may be wondering what differentiates HOA from homeowners or condo insurance; here’s the answer to that. Typically, an HOA policy covers the cost of property damage and other expenses shared by the people living in a community.
On the other hand, condo or homeowners insurance covers all expenses related to fixing or repairing damaged structures in your home and property.
FAQs
Does HOA require homeowners insurance?
Yes, most insurance companies require individuals to add more coverage to their policy. So, you will most likely need to purchase homeowners insurance alongside an HOA insurance policy for additional protection. Also, if you have a property loan, you also need to have homeowners insurance as mandated by your lender.
Does an HOA cover home insurance?
Unfortunately, an HOA does not cover home insurance for people living within the community. Generally, home insurance policies are mostly on an individual basis. This means that it offers coverage for private properties and belongings alone, not for other households.
Let’s say you stay in a condo. A full coverage HOA policy might offer coverage for the structures of the condo. However, you are still required to have an HO-6 insurance policy for optimum protection and financial security.
