What is HOA insurance?

Before deciding on coverage amounts for your home or condo insurance policy, be sure to check your HOA's "master policy."

Published March 1, 2019

If you belong to a homeowners association, you typically pay for two types of property insurance: home or condo insurance, and homeowners association insurance, or HOA insurance.

While 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, which 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 policy. Your HOA policy may cover more than you think, and it’s possible you’re overinsured and paying too much, as we’ll go over in this piece.

In this article:

What is a homeowners association (HOA)?

An HOA 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 you getting inspected, fined, or 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 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.”

How does an HOA master policy work?

As we touched on earlier, belonging to an HOA means having 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 said 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 with living on 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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What does an HOA master policy cover?

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 their liability coverage has those limitations, you’ll need to look into adding complimentary 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, the your personal policy is responsible for paying for the rest (more on that shortly).

You can also talk to a licensed expert at Policygenius who can look through your master policy and make sure you’re not overpaying for your condo or home insurance policy.

HOA insurance vs condo insurance

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 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 have:

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 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 documented in 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, you’re probably not compensating for your HOA insurance.

HOA insurance vs homeowners insurance

If you belong to a 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, and 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.

Policygenius’ editorial content is not written by an insurance agent. It’s intended for informational purposes and should not be considered legal or financial advice. Consult a professional to learn what financial products are right for you.