How Does HOA and Homeowners Insurance Work? - Pro Insurance Group

As a homeowner in a community that has a homeowners association (HOA), you will pay dues to the HOA. A portion of each member’s dues will pay for the HOA insurance. That HOA insurance is different from the homeowner’s insurance each owner has on their home. The way they work together is explained below.

HOA Insurance Vs. Homeowners Insurance

In the simplest terms, HOA insurance insures the HOA, while homeowners insurance insures the homeowner.
HOA insurance provides insurance coverage to the HOA when someone is injured while using the common area or damages HOA property such as buildings, facilities, equipment or other HOA-owned property. In an HOA that has condos or co-ops, the property consists of the building structure and common areas such as lobbies, stairwells, elevators, parking lots, roofs and related areas. If the HOA is held financially liable for an injury or damage, the HOA insurance will cover it up to the limitations on the policy. Without HOA insurance, each HOA member would be responsible for paying a proportionate share of the costs.

In contrast, homeowners insurance has no responsibility to cover damage to property. Homeowners insurance is insurance that each homeowner purchases to insure their home and contents. It covers damage to the home and its contents; if your home and some contents are damaged by fire, you would file a claim with your homeowners insurance to help pay for the cost of repair and replacement.

If the home is a single family home in an HOA, the insurance should have no bearing on damage that occurs to the home or on injuries that occur on the homeowner’s own premises. However, the insurance can have some impact on the owner of a condo in the HOA.

How The HOA Insurance Can Intersect With Condo Or Co-op Insurance

In an HOA with condos or co-ops, a condo owner should look carefully at the HOA insurance master policy before buying homeowners insurance coverage (condo insurance) on their condo. In some cases, the condo owner’s insurance coverage may overlap the master policy coverage. If so, the condo owner could be paying for insurance coverage already provided within the policy.
Ideally, the condo owner’s coverage will begin where the master policy coverage ends. The condo owner can learn where that point is by reviewing the master policy. Under the master policy, the HOA’s coverage will likely consist of one of two basic types of coverage:

• Bare walls-in: A bare walls-in policy covers the condo structure and nothing more. That coverage means the drywall itself and everything behind it, such as the building’s framing, wiring, plumbing and insulation. It does not cover anything in the interior of the condo unit and does not cover the condo owner’s personal property.
• All-in: An all-in policy covers everything that a bare walls-in policy covers, but also includes coverage for some interior items that are affixed to the condo that the condo owner did not bring in and will not take when they leave. Included in an all-in coverage policy are countertops, sinks and built-in appliances. It typically will not cover renovations that the owner makes to the unit. In those cases, the condo owner probably needs supplemental dwelling coverage.

No matter which type of coverage your master policy has, a condo owner will need insurance to cover the replacement cost of their own personal property.
The condo owner’s insurance coverage should comply with the mortgage lender’s (if applicable) requirements, which is usually dwelling coverage. That policy should also cover any other property and liability that the master policy does not cover. That can include, at a minimum:

• Loss assessment coverage (covers assessments that can be imposed on condo owners for the cost of injuries and damages on HOA premises that exceed the master policy insurance coverage limits).
• Loss-of-use coverage (covers the cost of other living arrangements while repairs are made to the condo, such as hotel and restaurant expenses).
• Liability coverage (covers the cost of damages that the condo owner or other people are responsible for).
• Medical payments coverage (covers the medical expenses of the condo owner’s guests if they’re injured on the condo owner’s property, regardless of the condo owner’s fault).

Some policies and lenders require coverage even when the master policy provides similar coverage. To avoid paying for unnecessary coverage or leaving a gap in coverage, consider consulting with a knowledgeable insurance agent for guidance.

Contact The Insurance Experts At Pro Insurance Group For More Information

The insurance professionals at Pro Insurance Group can help you make sure your insurance coverage is adequate. Whether you are an official or a homeowner in, the insurance experts at Pro Insurance Group can provide an insurance policy for you or your HOA at competitive rates. Contact their office for more information about how insurance coverage can be tailored for your needs.