HOA insurance, commonly known as the HOA master policy, protects the property owned or managed by the homeowners’ association. This includes the building’s roof, laundry room, hallways, clubhouse, pool, and green space. It also includes the lobby. HOA insurance provides legal and medical coverage for accidents, property damage, and building components such as roofs, elevators, and hallways.
The HOA’s liability coverage covers the costs of medical care and legal defense for visitors hurt in its common areas. For example, the HOA would be liable if a visitor trips and falls on the pool deck. Additionally, an HOA master insurance may include workers’ compensation for HOA personnel and directors and officers coverage for board members.
What is an HOA
A homeowners association (HOA) is a membership group that serves the community’s interests. Residents pay dues in exchange for certain services. The HOA, a community-elected organization, oversees the upkeep of common facilities and enforces ordinances to keep the neighborhood’s attractiveness.
Single-family home HOAs
HOAs for single-family homes seek to preserve the neighborhood’s attractive appearance. The government collects homeowner dues to maintain common spaces and manage communal resources such as parks and swimming pools. Single-family house associations (HOAs) may also have membership limits. This includes demanding homes to use a selected mailbox, roof shingle color, or exterior paint color.
Condo HOAs
Condo HOAs operate common amenities for condo residents and maintain and repair the condominium during construction. Furthermore, condominium HOAs may have laws limiting how owners use common areas.
HOAs purchase insurance to protect themselves from liability for injuries in shared areas like swimming pools and cover property and location repairs. Board members of HOAs oversee purchasing insurance for the association and deduct policy premiums from dues paid by members. Members of the HOA contribute equally to the insurance coverage because they have equal access to the common areas.
How Does HOA Insurance Work
As long as everyone in your HOA has equal access to the shared facilities and amenities, each member contributes the same amount toward the master policy premium dues. The homeowner association determines the demand for a master policy deductible, as does the severity of the damage. Regardless of how frequently they use common places such as garages or rooftop terraces, users must still pay dues and recover costs.
Types of HOA Insurance
Every HOA has a particular type of risk. In the same way, you can get several types of insurance. Each of these is meant to address a specific risk or potential threat that your organization may face. Though not all of them will be relevant, it’s still a good idea to get acquainted.
The most typical kinds consist of:
General liability insurance
The HOA is safeguarded by general liability insurance against claims of physical harm, property damage, and personal injury on the property. This insurance serves to protect the HOA against costly settlements and legal expenditures. Falls and slips in a community’s communal areas are regular claims in this situation.
Property insurance
Property insurance protects HOA assets from a variety of threats, including fire, wind, hail, and vandalism, ensuring their safety and security. However, most earthquake and flood damage is not covered by property insurance, thus a second policy is usually necessary. To fully protect your HOA’s assets, ensure that your property insurance policy provides adequate coverage levels.
Director and Officers (D&O)
Board members and other volunteers are protected from personal responsibility by D&O insurance for decisions and actions taken while serving the HOA. Because board members are frequently held personally accountable for alleged wrongdoings, this coverage is crucial.
Fidelity bonds insurance
Crime insurance, also known as fidelity bond insurance, protects homeowners associations from financial losses resulting from fraudulent actions by board members, staff, or contractors. This coverage is particularly crucial for homeowners associations managing large sums of money or having staff responsible for finances.
How Much Does an HOA Insurance
The monthly cost of HOA insurance could range from $200 to $500 or more. The precise price is determined by multiple factors:
- Kind of insurance: An all-in” coverage will cost more money than “bare walls” coverage.
- Amount of liability insurance: The premiums increase with the amount of liability coverage acquired.
- The size and nature of the property: This includes the amount of property covered. The price will increase with the number of amenities offered.
- The deductible amount: Generally, rates increase with a lower deductible and vice versa.
- The property’s location: This is based in part on relevant crime statistics and the ZIP code.
In addition, homeowners association members pay master insurance rates as part of their monthly or annual membership fees. Furthermore, under certain circumstances, homeowners may be obliged to pay the coverage deductible; in others, the HOA may take it from its general fund.
What Does HOA Insurance Cover
If someone is hurt in your shared community area, you are protected from liability by a HOA insurance policy, often known as a master policy. For instance, the association policy will cover damage to the external walls of a condominium. However, you should be aware that your coverage is limited.
What Does HOA Insurance NOT Cover
Although HOA insurance does not provide comprehensive coverage, it is designed to safeguard against mishaps or damage in common spaces. Certain obligations that arise on your land or within your home or condominium, such as accidents or property damage, may be waived by your homeowners association. HOA insurance will also not reimburse you for personal stuff lost or stolen, even in communal spaces.
HOA insurance coverage for damage to communal spaces is limited. If the damage exceeds the maximum amount specified in the homeowners association’s rules, the HOA may request monetary contributions from local homes.
Who Needs an HOA Insurance
Certain states require that condo associations and homeowners carry insurance. These associations may choose a HOA master policy over a patchwork of different policies. As a result, the groups will be able to protect their finances while also complying with state requirements.
If the common area is destroyed, the homeowners’ association may levy a large assessment fee to pay the costs of necessary repairs. These homeowners may suffer financial difficulties as a result. If a HOA member is injured without insurance, the injured party may sue the HOA and its members, potentially incurring substantial legal fees.