HOA Insurance: You and Your Homeowners Association

You just purchased your first home or condo, and you hear a knock at your door. It’s the HOA welcoming you to the neighborhood! Often made up of your friends and neighbors, homeowners associations provide a lot of great benefits such as community upkeep, neighborhood events and guideline creation for the area that can help keep your property value high. An HOA is a great way to make sure community voices are heard and it can even offer protection for incidents that occur in public areas.

But in order to get all these great benefits, there’s usually a yearly (or monthly) fee involved. This helps to pay for amenities, as well as purchase an HOA insurance policy that provides legal and financial protection for the neighborhood.

Though not all neighborhoods or condo complexes have HOAs, those who do, contribute to a HOA insurance policy every year. Though it may seem unnecessary given you’re already purchasing a condo or home insurance policy, HOA insurance provides important protection you’ll be thankful for down the line (trust us — we know a thing or two about total home protection).

Key takeaways:

• HOA insurance works in tandem with your homeowners or condo insurance to provide complete coverage.
• Homeowner associations help maintain and protect public spaces, set rules for residents and address liability issues that arise in common areas.
• HOAs can require extra coverage, though you’ll likely already have enough protection through your traditional home or condo insurance policy.

What is an HOA?

A homeowners association is a non-paid board of local residents that work together to address issues that come up within their neighborhood, enforce the established rules for the community to follow and maintain public spaces so that everyone can enjoy them. Representatives are often chosen through an election process. It’s the HOA’s job to make sure that the neighborhood is running smoothly and that everyone is doing their part.

So what exactly does an HOA have control over? Well, that depends on your specific location! If you have public spaces such as a community park, pool or tennis courts, the HOA will often be responsible for cleaning and maintaining those areas. They may even take over neighborhood watch programs to ensure there is adequate security for your area. Some HOAs take this a step further, requiring you to seek their approval before major renovations or painting is done to your home or condo.

Homeowners associations are a board of local residents that work together to address issues within their neighborhood, set rules for residents and maintain public spaces.

One final facet that HOAs have responsibility for — that not many people realize — is liability protection for accidents that occur in the common space of the neighborhood. Say that someone gets hurt at the community pool, or damages a building in a common area during an event. An HOA master insurance policy would help cover the legal, medical and repair costs associated with the accident. This helps cushion the burden for residents.

What does an HOA insurance policy cover?

An HOA insurance policy (sometimes referred to as a master policy) covers you from liability should someone get injured in your common community space. For example, if you live in a condominium, the association policy will cover damage to the exterior walls of your home. There are caveats to what you’ll be covered for, though, that are important to understand.

What does an HOA insurance policy not cover?

While HOA insurance focuses on protecting you from having to pay for damage or injuries occurring in common areas, that doesn’t mean everything is covered! Some of the issues you may face as a homeowner that your HOA won’t cover include any liability for injuries or damages that occur on your own property, or within your home or condo. Also, if your personal property gets lost or stolen (even in common areas), HOA insurance won’t provide any financial support.

HOA insurance also has coverage limits for damage done to common areas. If the damage exceeds the limit of the association policy, the HOA may require homeowners in the area to contribute money to help cover the costs.

HOA vs. condo vs. home insurance

You’re probably wondering just how different HOA insurance is compared to your condo or home insurance policies, and you aren’t alone. After all, if you already have protection for your home and belongings, why do you have to pay for more insurance? Well, there are a variety of reasons HOA or extra condo insurance might be required in addition to your traditional policy.

When you own a home within a HOA community, your homeowners insurance covers your property inside and out; however, depending on how the association defines where your property begins and ends determines where the HOA insurance policy begins and your homeowners policy ends. Let’s say your association defines that your property ends where the sidewalk begins. If someone is injured on the way to your property, where that injury happened will help determine which insurance policy pays for the injury.

When looking at condo insurance, there are two main types of condo protection. Bare walls coverage means your condo association will cover the walls themselves and the systems inside of them (such as plumbing and wiring).The second type, all-in coverage continues this protection by including coverage for damaged fixtures, countertops and other built-in items.

Your personal condo insurance plan will likely cover the internal structure of your home, personal belongings and any liability for injuries that occur inside your property. As a condo unit owner, the additional coverage you pay for in your condo fees will also help protect you from damage to your condo’s external structure and common areas (see our article on loss assessment coverage for more on that) as well as any liability if someone gets injured in the building.

• HOA insurance protects you from paying for damage or liability claims in common areas.
• Condo insurance covers the internal walls of your home, your belongings and liability issues that occur inside your condo.
• Home insurance protects the inside and outside of your home, your personal property and on-property liability.

Similar to the above, HOA coverage helps to fill in the gaps of your homeowners insurance policy. While your home insurance will cover your home’s structure, your personal belongings and your liability inside your property, that coverage ends in common areas in your neighborhood. This means that should someone get injured at your neighborhood pool and decide to take legal action, HOA insurance will help shield you (and your neighbors) from having to foot the bill.

Can an HOA require homeowners insurance?

Homeowner associations may require you to get additional insurance coverage depending on the circumstances of your neighborhood (if your neighborhood pool allows visitors, etc). However, since most mortgage lenders require home insurance before approving a loan, it’s likely that you’ll already have the coverage your HOA requires.

HOAs may get a bad rap, but can actually provide great benefits that help improve the overall look (and property value) of your home. And what’s not to love about a safer and more beautiful neighborhood? Weighing the pros and cons is important if you are considering buying a home or condo with an HOA, but remember the best way to stay fully protected is with a comprehensive home insurance policy. And for that, it’s best to speak with the experts.