Understanding HOA Insurance Policies: What Every Homeowner Should Know
HOA insurance provides coverage for the collective interests of the community members of the HOA community. This type of insurance is important in protecting the collective interests of the community members, but it can sometimes be a bit confusing. In this post, we hope to provide some clarity to what HOA insurance covers, what is not covered by HOA insurance, and why it’s important. We hope you enjoy this post, and should you have any questions, don’t hesitate to contact us.
What is HOA Insurance?
HOA insurance, also known as a master policy, is a type of coverage which protects the common areas of an HOA community and the shared structures within the areas of the community managed by the HOA. Common areas may include everything from the pools, to the clubhouses, to the community gates, to the gyms, and in some cases even the sidewalks. The master policy is maintained by the HOA themselves and is funded through the dues paid by homeowners residing in the HOA community.
What Does HOA Insurance Cover?
The coverage provided by HOA insurance generally falls into several categories:
Property Insurance: Property insurance will cover damage made to common property and shared structures from incidents involving fires, storms, or vandalism. It’s important to note this coverage will not cover the interiors of individual homes or personal property.
Liability Insurance: Liability insurance offers coverage for someone who is injured in a common area. Liability insurance can help cover legal or medical costs arising from the incident the HOA may face. This component of the HOA insurance policy is crucial, as it protects the association from potential lawsuits.
Directors & Officers (D&O) Liability: D&O liability offers coverage for the HOA board members against lawsuits in relation to their management decisions. This is a form of essential coverage, as it protects those who govern the HOA community.
What’s Not Covered by HOA Insurance?
While HOA insurance may offer a good amount of coverage in most cases, there are aspects it does not cover. These areas in which HOA insurance does not extend coverage consists of the interiors of individual homes. The homeowners who reside within the HOA community are responsible for purchasing their own individual coverage options to cover personal property, personal liability, and improvements made within their unit. This policy is known as an HO-6 policy for condo owners.
Why is it Important?
Understanding and ensuring adequate HOA insurance coverage is essential due to the following:
- Protects collective property values: By ensuring common areas are well maintained and protected against losses, the overall value of the property in the community is supported
- Reduces individual liability: Providing a layer of financial security against accidents which occur in shared spaces saves homeowners significant legal and medical fees
- Ensures compliance with laws: In many regions, certain types of insurance are legally required for HOAs
Choose Portsmouth Atlantic Insurance for Your Homeowners Insurance
For homeowners who reside within an HOA, it’s so important to not only understand what HOA insurance covers, yet also what additional coverage one may need if residing within an HOA community. You’ll always want to review the terms and conditions of your HOA’s master policy and take the time to reach out to an insurance professional to determine if you and your home are fully protected. By understanding your HOA’s insurance policy, you can prevent surprises and ensure you’re able to enjoy a safe and secure community living experience. Feel free to contact us with any questions you may have and we’ll be happy to help.