HOA insurance: definition, coverage of the main policy

If you live in a condominium or planned housing construction, you will usually be part of an association of homeowners. As a HOA member, you will usually pay part of the basic insurance policy of your residential building or residential community.

Knowing what the main policy of your HOA covers will ensure that you do not have too much or too little insurance for your own property.

What is HOA insurance?

HOA insurance covers damages and liability for injuries that occur in structures and common areas that the homeowners association owns.

HOA insurance protects you, your association, and the assets of its employees if something goes wrong, explains Mario Ivelich of Mag Mile Law, an insurance coverage firm in Chicago.

“For example, if an earthquake hits and causes damage to the apartment building, HOA’s main policy should be to cover property damage that will pay for the renovation of the building,” Ivelic said.

A lawsuit can significantly deplete your HOA’s cash reserves. In this case, your HOA will have to ask for a special assessment, which means higher fees from you to refund the HOA, according to Insurance.com.

What is HOA?

HOA is an organization managed by a board of individuals who monitor the housing community. Residents choose board members from among their neighbors. Community members pay HOA fees that cover things like insurance, property maintenance and repairs.

These are the most common types of HOA:

  • Family houses HOA: These associations cover single-family homes that are part of a community, usually in a planned development. Like homeowners outside the HOA, you own the structure and the plot on which it is built and are responsible for insuring them. You pay the mortgage, property taxes and insurance if you live in a single-family house HOA. The main policy of your HOA will cover shared spaces such as parks, sidewalks and swimming pools.
  • HOA Condo: A condo is a private home in a building with other units. Unlike a single-family house HOA, the basic policy of your condo association will cover the structure and foundation of your building. He will also pay for liability costs and property damages incurred in common areas. You will need apartment insurance to cover the interior of your home and pay all legal costs that result from injuring your property.

What does the main policy of HOA cover?

If you live in a detached house, HOA insurance will only cover common areas such as parks or swimming pools. You are responsible for obtaining coverage for your house, personal property, liability and reimbursement of living expenses if your home becomes temporarily uninhabitable.

In the apartments you usually live in a house next to others. Because HOA owns the exterior of the building, its core policy usually covers repairs to the structure and foundation of your building. In addition, the basic policy will cover costs related to accidents or property damage in common areas. You are usually responsible for content loss on your device and accidents that occur on your device.

Here are some of the specific areas of coverage that HOA’s main policy can provide, according to Ivelich:

  • Property damage in common areas: If common areas such as a gym, pool or lounge are damaged, your basic HOA policy will pay for repairs.
  • Responsibility of directors and employees: Protects the HOA board of directors if they are sued for actions they take on behalf of the association, including breach of contract, breach of HOA management documents, and failure to purchase sufficient insurance.
  • Employee compensation: Protects the association if its employees are injured during work.
  • Dishonesty of employees: Protects HOA from liability if an employee steals from a resident.
  • Discrimination: Protects HOA in the event that an apartment owner files a discrimination case.
  • General commercial responsibility: Protects third parties who are injured in the property of HOA.
  • Rules for commercial umbrellas: If the cost of damage or injury exceeds the coverage of the HOA’s main policy, the umbrella policy will pay the difference.

Types of HOA insurance

There are usually three types of main policies. What type you have will determine what insurance you need for the property you own.

  1. Bare wall covering: This is the most basic type of main HOA policy. According to the International Institute for Risk Management (IRMI), it will protect the structure, facilities and furnishings of your building in collective areas. If your HOA has this coverage, you are responsible for insuring the contents of your home, including your built-in appliances.
  2. All-in coverage: This basic policy covers the exterior of your building and some aspects of your device, including repairing damaged fixtures and any structural improvements you have made to your home, according to IRMI.
  3. Special coverage of the subject: This main policy will cover the entire property in the residential community or condominium building, including the facilities in each block, according to IRMI. However, the entity’s special coverage will not cover your personal property or any structural improvements to your unit. It will only pay to restore your device to its original state before any improvements.

HOA insurance against apartment insurance

Apartment insurance (HO-6) is usually combined with HOA insurance to fill in the gaps in coverage. The association of apartments will cover property damages in the common areas and injuries that occurred in the common areas. “It will not cover accidents and injuries that occur in housing units unless they are the result of a structural problem, according to Nick Schroeder, an insurance agent at Texas General Insurance.”

While all residents pay part of the cost of HOA insurance, you are responsible for your own


apartment insurance

politics. Knowing what the main policy of HOA covers is essential for purchasing the exact amount of insurance coverage for the apartment and not overpaying for your insurance.

According to the latest report on condominium owner / cooperative insurance from the National Association of Insurance Commissioners (NAIC), the average annual home insurance premium in the United States in 2019 is $ 512. Here are the common differences between a HOA bare wall insurance policy and a standard apartment insurance policy:

HOA insurance against homeowners insurance

While apartment insurance covers apartments and condominiums, homeowners’ insurance (HO-3) covers detached single-family homes. Even if you are part of HOA, you will still buy


homeowners insurance

if your property is separate from other structures.

With homeowners insurance, you are responsible for all coverage inside and outside your home. Homeowners insurance covers coverage for your home, personal property, liability and loss of use.

HOA insurance is combined with homeowners’ insurance if your home is part of a HOA. The basic policy usually covers property damage and liability costs in common areas such as a swimming pool or park.

The average annual insurance premium for homeowners in the United States in 2019 was $ 1,272, according to the latest data from the Insurance Information Institute.

How to get the basic insurance policy of your HOA

You can get a copy of the basic policy of your HOA from the board of the homeowners association. The amount of insurance for the apartment you buy will depend on what your main policy already covers. For example, if your HOA only offers “bare walls”, coverage, you may need housing coverage to pay for damage to your internal structure. However, if your HOA has “all” coverage, you may not need any or only minimal housing coverage.

HOA members meet quarterly and sometimes monthly, so expect changes in your HOA contributions. Reviewing the core policy each year is essential to see if anything has changed and requires you to update your coverage. For example, if your HOA lowers or upgrades its policy, it may require you to have more or less housing coverage.

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