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When you belong to a homeowners association, you’re responsible for paying monthly HOA membership fees. A portion of these fees pays for general maintenance and upkeep to common areas and shared amenities, and the other goes toward the community’s HOA insurance. Also known as a “master policy”, HOA insurance covers physical damage to any structures or shared spaces owned by the HOA. It also covers any liability expenses the HOA is responsible for, like if a guest is injured on the property.
In order to determine your own personal home or condo insurance coverage needs, you’ll need to look over the HOA master policy to see what’s already covered. It may cover more than you think, and it’s possible that, between your home or condo owner’s policy and the master policy, you’re overinsured and paying too much, as we’ll go over.
If you belong to an HOA, you pay membership dues — some of which go toward the community’s HOA insurance, or master policy
A master policy is a form of property and liability protection for home or condo association members in the event of damage to the structure of the condo building or common areas
Your personal condo owner’s policy should supplement the coverages in the HOA master policy
A homeowners association is an organization or community development to which members pay fees for certain services. As a home or condo owner in an HOA, you’re also subject to certain rules and regulations instituted by the member-elected HOA board.
Single-family home HOAs often have rules for maintaining a harmonious aesthetic, which means rules against, say, painting your home or fence a certain color. Condo HOAs, meanwhile, may have rules that prohibit members from using the community pool after a certain hour, or smoking/vaping restrictions while on the premises.
Failure to follow HOA rules may result in an inspection, fines, or being banned from using certain facilities. If you owe too much in fines or you’re sued, your HOA could put a lien on your property and, at worse, foreclose on your home.
When you pay your HOA dues, that money is going to everything from maintaining and improving community areas to security and surveillance services to HOA insurance, which is also known as your community’s master policy.
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Belonging to an HOA includes sharing spaces with others, including the lobby of a condo building, swimming pools, gyms, and tennis courts. As members, not only do you pay for maintenance and renovations to common areas, you also pay for a collective insurance policy, also called a master policy, to insure against property loss to those areas.
A master policy is a form of property and liability insurance that HOA members collectively pay for as part of their membership dues. As members, you each pay an equal amount toward the master policy, given that everyone in your HOA has equal access to the same common areas and amenities. Part of the deal when living in an HOA property is, 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.
For condo and co-op associations, HOA policies vary in terms of coverage. Some master policies provide a certain level of coverage to individual condominiums as well as building common areas, while others cover the bare minimum. In either case, you’ll need your own condo insurance policy to compliment your master policy.
HOA master policies are a type of commercial property insurance that cover shared common areas, such as condo lobbies, neighborhood pools, rooftops, or patios. The master policy is paid for by membership dues and can help pay for accidental property damage to shared spaces.
Your HOA master policy should, at the very least, cover any shared spaces and structures owned by the HOA. As a member, you’re covered for:
Liability expenses that the HOA is responsible for
Property damage to the building or shared spaces
Something to note: not all master policies will cover your liability if a guest is injured in your home, or if you cause an accidental injury to someone away from your home. If the master policy’s liability coverage has those limitations, you’ll need to look into adding complementary liability coverage to your own condo policy.
There are generally three types of master policies, and which type you have will determine how much personal condo insurance you need.
Bare walls in coverage - A bare walls in master policy 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. This is the most basic type of master policy.
Single entity coverage - Also known as walls in or studs in coverage, single entity master policies include all the same building and common area protection as bare walls, but coverage for the interior structure of your unit extends to the outside of the walls, top flooring, cabinets, and bathroom fixtures.
All-in coverage - An all-in policy covers everything that a single entity master policy covers, but extends coverage to built-in appliances.
Although HOA insurance will provide some coverage for the structure of your condo, you’re fully responsible for insuring your personal belongings inside the unit. Your master policy won’t cover your furniture, clothing, jewelry, electronics, and other belongings, so you’ll want to make sure you have enough personal property coverage to cover their replacement cost.
Additionally, your condo insurance should include:
In an ideal world, your HOA insurance and your condo insurance policies would complement each other perfectly. But in some cases, your mortgage lender may require more condo insurance than you actually need.
If your lender doesn’t realize how much dwelling coverage is already in your master policy and doesn’t account for that in their requirements, you may ultimately end up overpaying, as is clear from this Trustpilot testimonial from a Policygenius client:
My condominium lender is far from easy to work with. For as long as I’ve owned the unit, they’ve required over $500,000 in coverage, even though the HOA has supplemental coverage for the exterior of the building. Jonathan (licensed Policygenius agent), through what I’m sure were excruciatingly difficult conversations, obtained custom documentation to prove to the lender that a policy limit of around $150,000 would be sufficient. In doing so, Jonathan saved me over $2,000 on this policy alone.
Condo insurance can cost as little as a couple hundred dollars and as much as $1,000, but if you’re paying anywhere north of that, your coverage may be overlapping with your HOA insurance.
The master policy covers the HOA, while condo insurance covers individual unit owners. HOA insurance may include some coverage for the structure of individual units, but don't count on that being the case. Be sure to check the master policy to determine your condo insurance coverage needs.
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. However, there are a few things to keep in mind when getting coverage for a home in an HOA:
Your lender may require that you get loss assessment coverage to pay for property losses to common areas once the master policy has reached its coverage limit.
Your insurance company may offer an HOA discount for members. That’s because, in most cases, HOA communities are gated and/or secure, so homes are less likely to be victims of theft.
Your master policy may provide a limited amount of liability insurance for accidents that occur in community spaces. Once the master policy limit is exhausted, however, your home insurance will need to pick up the remainder of the claim.
Once you know the ins and outs of your HOA master policy, you’ll be better prepared to select the correct amount of coverage and get a condo insurance quote that doesn’t break the bank. If you don’t have your HOA master policy, contact your condo association to retrieve a copy.
You can reach out to one of our licensed insurance experts at Policygenius. We can look through your master policy and make sure you’re not overpaying for coverage while running your condo insurance quote.
Not sure how to figure out your homeowners insurance rates or coverage needs? Crunch the numbers with our home insurance calculator.
A home warranty is a service contract that helps cover the cost of broken home appliances or systems, like your refrigerator, washer and dryer, and HVAC system, but warranties are limited in terms of what’s covered and may not be worth the cost.