When you own a condo
or a home in a planned community like a subdivision, you're usually required to pay fees to homeowners association (HOA). While those fees can be costly and the association may have standards you must uphold, such as good lawn care, there are many benefits to membership in an HOA. For one thing, a homeowners association carries an insurance policy that provides protection to its members for property damage and liability
in common areas. This HOA insurance policy does not, however, cover all types of damage. It only applies to areas that are used by more than one household.
While a clubhouse or playground is easily identified as common property, it could also mean elevators, stairwells, or even sidewalks that exist for everyone's convenience and use. Here are some of the most frequent issues for which an HOA insurance policy usually provides protection in these shared spaces.
HOA insurance coverage: Property damage to common spaces
If there's property damage in a common area for your HOA, it will be covered by HOA insurance.
If a tornado rips the roof off your community’s clubhouse, for instance, the HOA insurance policy covers the roof's replacement or repairs. This applies to any common area to which you gain access through the payment of your HOA dues, including pools, sidewalks, or community perimeter fencing.
Just as with homeowners’ insurance
, the damage must be sudden and unexpected. If property damage occurs as a result of normal wear and tear or neglected maintenance, there's a chance the insurance company might deny the claim. Fortunately, HOAs exist in part to conduct regular maintenance to such areas, so it's unlikely that a claim within a reputable community would be denied.
HOA insurance coverage: Liability in common areas
An HOA insurance policy also covers the cost of liability claims within shared spaces. An example of such a situation would be if a guest or member was injured when slipping by the pool. The HOA's members would not be held liable for sharing the medical expenses or any other expenses incurred in litigation.
Other HOA insurance coverage: Directors and officers
While not part of every HOA insurance policy, it's not uncommon for protection against the mishandling of assets by the HOA board itself to be included.
This provides checks and balances to hold the directors and officers accountable for their actions. So, if damage or loss occurs as a result of the mismanagement of HOA dues or outright negligence, the rest of the HOA's membership does not have to foot the bill if directors and officers coverage is part of the HOA insurance policy.
To make things a bit more complicated, however, there are two types of coverage for which an HOA may opt to include within a condominium: bare walls coverage or all-in coverage. A bare walls policy covers the actual structure of the dwelling and the things like electrical and plumbing that reside within the walls. All-in coverage is inclusive of bare walls coverage with extra protections to items like your appliances.
Your HOA insurance policy does not cover everything that can go wrong in your home or condo. So, you may also need to carry homeowner’s insurance to protect yourself against common house liabilities or less common disasters.
As you select the best homeowner’s insurance, check for overlaps and gaps. You do not want to pay for the same coverage twice nor do you want to be unprotected in the event of frequently omitted protections, such as flood insurance
. Key Takeaway HOA insurance only covers shared spaces within your building, so insuring your own property requires additional coverage.
MORE: Condos vs townhouses: What's the difference?
FAQs
Do HOA fees cover insurance?
Yes, HOA fees cover insurance to common areas. You will still need to get your own insurance policy to cover your home.
Does HOA insurance cover water damage?
HOA insurance might cover water damage, but it depends on where the water is coming from, what is damaged, and the coverage listed in the governing document. The HOA's governing document should specify the conditions under which water damage is covered and when it's not, so give the governing documents a read-through to be sure.
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