More on Home Insurance
More on Home Insurance
HOA insurance covers the condo building and common areas owned by your homeowners association — it’s paid for by members’ HOA dues. Before taking out a personal condo policy, check your HOA policy to see what’s already covered.
If you belong to a homeowners association, you typically pay for two types of property insurance: home or condo insurance and HOA insurance.
Just as your lender requires that you get home or condo insurance as a condition for taking out a mortgage, your HOA will require that you pay dues as a condition for HOA membership. A portion of membership dues pays for the community’s HOA insurance. Also referred to as the master policy, HOA insurance covers physical damage to shared spaces and general liability if a guest is hurt in communal areas.
In order to determine your home or condo insurance needs, you should first look over what’s already covered by your HOA master policy. It may cover more than you think, and it’s possible that, between your personal home insurance and your mater 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 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.
As we touched on earlier, belonging to an HOA includes shared spaces: like the main area of a condo building, a swimming pool, gym, tennis courts, you name it. And as members, not only do you pay for maintenance and renovations to common areas, you also pay for a collective insurance policy, or 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.
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Your 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.
You’ll also want to look at your master policy’s coverage limits for property damage to shared spaces. After the coverage limit is reached on a single claim, your personal policy is responsible for paying for the rest (more on that shortly).
To determine how much condo or co-op insurance you need for your individual unit, you’ll have to take a look at your master policy, of which there are two major types:
Bare walls-in: A bare walls-in policy covers just the structure of the condo, so basically everything behind the condo walls, including the drywall itself, framing, wiring, plumbing, and insulation.
All-in: An all-in policy covers everything that a bare walls-in policy covers, but includes coverage for fixtures, like countertops, sinks, and built-in appliances. A helpful way to think about all-in coverage is if you can’t take it with you and you didn’t move it in, it’s probably covered. All-in coverage typically doesn’t include coverage for renovations made to the unit. For that, you need supplemental dwelling coverage in your HO-6 condo policy.
The main discrepancy between an HOA policy and a condo policy where you’re solely responsible is personal property coverage. Your master policy won’t protect your stuff, so you’ll want to be sure you’re insured for the replacement cost of your personal belongings.
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:
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.
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 HOA 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.
Once you’ve done that, 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.
Pat Howard is a homeowners insurance editor at Policygenius in New York City. He has written extensively about home insurance cost, coverage, and companies since 2018, and his insights have been featured on Investopedia, Lifehacker, MSN, Zola, HerMoney, and Property Casualty 360.
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