If you live in a condo or gated community, you’re likely a part of a homeowners association (HOA). This comes with a slew of perks for homeowners, which might include a shared pool, gym, playground, and clubhouse, as well as community regulations to avoid nuisances and disturbances. But with the added conveniences usually comes HOA fees that help cover the upkeep of these amenities, as well as the HOA’s master insurance policy.
HOA insurance not only protects the association from property damage and liability claims, but it can benefit you as well from having to pay loss assessment fees for expensive claims the association’s insurance doesn’t fully cover. Understanding how HOA insurance works can help you determine your own condo or home insurance needs.
What is an HOA master policy?
An HOA master policy is insurance coverage the association purchases to protect itself from property damage and liability insurance claims that occur to shared spaces and structures owned by the HOA.
As a member, you’re typically covered for:
Liability expenses that the HOA is responsible for. HOA liability insurance pays if a guest is injured in a common area — like a shared playground, pool, or gym — and the HOA is found liable.
Property damage to the building or shared spaces. HOA hazard insurance pays for property damage to a condominium building or common areas due to a covered peril, like a fire, windstorm, or break-in.
Your personal home or condo insurance policy should supplement the coverages in the HOA master policy. If your HOA’s master policy has high coverage limits, then you might not need as much loss assessment coverage to protect you from claims the HOA insurance doesn’t fully cover.
How does an HOA master policy work?
Every member pays an equal amount toward the master policy premium dues, given that everyone in your HOA has equal access to the same common areas and amenities. Whether or not you have to pay a master policy deductible depends on your HOA and the extent of the loss. Even if you don’t frequent the rooftop patio or park your car in the garage, you’re not exempt from your share of dues or insurance claim expenses related to those common spaces.
What does a condo association insurance policy cover?
Some condo association insurance policies provide a certain level of coverage to individual condo units as well as common areas, while others cover the bare minimum — meaning only the condo building and shared spaces. In either case, you’ll need your own condo insurance policy to complement your master policy.
There are generally three types of condo association insurance policies, and which type your condo association has will determine how much personal condo insurance you need.
Bare walls-in coverage
The most basic type of master condo insurance policy, bare walls-in coverage provides minimal coverage for the structure of the condo. It basically covers everything behind the condo walls, including the drywall itself, studs, and insulation, but not much else.
Walls-in coverage
Also known as single entity or studs-in coverage, walls-in master condo policies include all of the same building and common area protection as bare walls-in protection. But it also extends coverage for the interior structure of your unit to the outside of the walls, top flooring, cabinets, and bathroom fixtures.
All-in coverage
The most comprehensive type of condo association insurance policy, all-in coverage covers everything that a walls-in master policy covers, but extends coverage to built-in appliances. All-in policies may also extend coverage to alterations and unit improvements that you made. If your condo association has an all-in master policy, you may not need to add any dwelling coverage to your individual condo insurance policy.
Do I need loss assessment coverage?
It’s a good idea to add loss assessment coverage — designed to cover costs that exceed the limit of your HOA master policy — to your personal home (HO-3) or condo insurance (HO-6) policy if you live in an HOA. That’s because an HOA insurance master policy only covers damage and liability claims to shared spaces up to the coverage limits in its policy. If a claim exceeds those limits, then the HOA usually requires members to pay an equal share of the leftover amount, so loss assessment coverage can protect you from paying that cost out of pocket.
What happens if I'm overinsured?
In some cases, your mortgage lender may require more condo insurance than you actually need. If you have an all-in HOA insurance policy, you likely don’t need that much — if any — dwelling coverage in your personal condo insurance policy, since your master policy already includes coverage for built-in appliances and the structure of your condo unit.
The average cost of condo insurance is $531 per year, though it varies depending on where you live and your coverage limits, among other factors. If you’re paying anywhere north of $1,000, your coverage may be overlapping with your HOA insurance.
What is an HOA?
A homeowners association (HOA) is a community organization that members pay fees for, including everything from maintaining and improving community areas to security and surveillance services to HOA insurance. As a home or condo owner in an HOA, you’re also subject to rules and regulations instituted by the member-elected HOA board.
Usually, there are two different types of HOAs that you can be a member of:
Single-family home HOAs: Typically homes in a neighborhood or community that often have rules for maintaining a harmonious aesthetic, which means rules against, say, painting your home or fence a certain color and requirements around maintenance and upkeep.
Condo HOAs: Designed for condo unit owners, the rules typically include upkeep and maintenance requirements, hours around shared spaces like the pool, smoking and vaping restrictions while on the premises, quiet hours, and more.
How much are typical HOA fees?
HOA fees often range from $100 to $1,000 or more — they vary widely depending on where you live, how many other people live there, the exclusivity of the community, and the amenities you have access to, among other factors.
HOA insurance vs. condo insurance vs. homeowners insurance
Although HOA insurance provides some coverage for the structure of your condo, an HOA master policy won’t cover your furniture, clothing, jewelry, electronics, and other personal belongings. It also won’t cover liability claims if someone is injured or their property is damaged inside your individual condo unit. That’s where condo insurance comes in.
On the other hand, if you belong to an HOA for single-family homes or subdivisions, your home insurance coverage won’t differ too much than if you weren’t in an HOA. Your HOA insurance coverage doesn’t extend to the structure of your home, so your dwelling coverage isn’t impacted by the master policy like condominiums are.
HOA insurance | Condo insurance | Homeowners insurance | |
|---|---|---|---|
Covers the physical structure of shared areas, such as outside walls or elevators, that are used by HOA members. | Covers the structure of the condo unit and upgrades you made, like custom wood flooring. | Covers the cost to rebuild your house and attached structures, such as a garage or deck. | |
Covers structures in shared areas, like a detached garage or a gazebo. | Not covered | Covers damage to standalone structures on your property, such as a shed. | |
May cover shared property, like outdoor grills, picnic tables, or furniture in the lobby of the building, but offers no coverage for your personal property. | Covers your belongings, like your furniture, clothing, laptop, and more. | Pays to replace your possessions, such as furniture, kitchen appliances, and electronics, due to loss from a covered peril. | |
Typically does not provide loss-of-use coverage. | Covers additional living expenses while your condo is being rebuilt or repaired after a covered loss. | Covers temporary living expenses while your home is being repaired. | |
Loss assessment is designed to go above and beyond your master policy limits; this coverage is not provided by your HOA master policy. | Covers the remaining costs that you’re responsible for paying once your HOA master policy hits its coverage limit. | Not covered | |
Covers legal and medical fees if someone is injured in a common space. | Covers legal fees and medical expenses if you’re found to be at fault for someone else’s injury or property damage that occurs in your condo unit. | Covers injuries to other people or property damage when you are at fault. | |
Policy may or may not provide additional medical payments coverage in addition to liability coverage limits. | Small amount of coverage for guests’ medical expenses if they’re hurt in your home, regardless of who was at fault. | Covers small medical bills, typically between $1,000 to $5,000, for guests who are injured in your home, regardless of who is responsible. |
3 tips when getting coverage for a home in an HOA
Here are a few things to keep in mind when getting coverage if you live in a condo or gated community.
You might want to get loss assessment coverage. This prevents you from having to pay out of pocket for shared HOA claims that exceed your association’s master policy limits.
You might score a discount on your insurance premiums. Insurance companies often offer discounts to homeowners who live in an HOA since these communities are typically gated and more secure, meaning you’re less likely to file a theft or vandalism claim.
Your HOA’s master policy covers liability claims in shared spaces. But once the master policy limit is exhausted, the liability portion of your home insurance policy will need to pick up the remainder of the claim.
Frequently asked questions
Who’s responsible for paying HOA master policy premium dues?
HOA master policy premium dues are paid by the members of the HOA community. How much your premium dues are depends on the coverage limits in your HOA’s master policy and how many members live in your community, among other factors.
Do condo HOA fees include insurance?
Yes, condo HOA membership fees partially go toward the HOA insurance master policy. That said, you will need your own personal condo insurance policy on top of the HOA policy. How much condo insurance you need will depend on which type of HOA master policy your association has.
Can an HOA require homeowners insurance?
An HOA can require residents to get homeowners insurance or additional coverage. However, odds are you already have sufficient insurance if you have a mortgage. This is because most mortgage lenders require home insurance since they have a financial stake in your home until you’ve completely paid off your mortgage.
Do homeowners associations need insurance?
It’s recommended that homeowners associations purchase HOA insurance to protect the association from expensive property damage and liability claims that occur in shared spaces throughout the community. If an HOA doesn’t have insurance, the condo and homeowners would have to pay the difference — which could cost them thousands of dollars out of pocket.
Does an HOA cover home insurance?
No, an HOA does not cover home insurance for members of its community. It’s the responsibility of the homeowner to purchase their own separate home insurance policy to protect the structure of their home, personal belongings, and personal liability against damage, theft, or lawsuits.
What are popular HOA insurance companies?
A few popular HOA insurance companies include Farmers, Travelers, and State Farm.
