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When you belong to a homeowners association (HOA), 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 in a shared area, like the community pool. 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.
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.
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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 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. Typically the rules include upkeep and maintenance requirements, hours around shared spaces like the pool, smoking/vaping restrictions while on the premises, quiet hours, and more.
When you pay your HOA dues, that money goes 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 a member of an HOA, not only do you pay for use, maintenance, and renovations to common areas, you also pay for a collective HOA insurance policy, also called a master policy.
It works like this.
Every member pays an equal amount toward the HOA master policy, given that everyone in your HOA has equal access to the same common areas and amenities. If part of a shared area — like the lobby, gym, or structure of the building itself — is damaged by a covered peril, like a fire or windstorm, the HOA master policy will pay for the repairs. Whether or not you have to pay a master policy deductible depends on your HOA and the extent of the loss.
Every member has to pay into the HOA insurance policy. 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.
HOA policies vary in terms of coverage.
Some master 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. How much personal condo insurance you need directly relates to what kind of master policy you have.
Your HOA master policy should, at the very least, cover any shared spaces and structures owned by the HOA. As a member, you’re typically covered for:
Liability expenses that the HOA is responsible for. Pays if a guest is injured in a common area, like a shared playground, lobby, or gym and the HOA is liable.
Property damage to the building or shared spaces. Pays if the condominium building or common area is damaged by a covered peril, like a fire or break-in.
Consider your liability coverage limits when purchasing a condo insurance policy.
A master policy likely won't cover you if you cause an accidental injury to someone inside your individual condo unit. Make sure you have enough liability coverage in your personal condo insurance policy to cover your assets in the event of an expensive lawsuit.
There are generally three types of master policies, and which type you have will determine how much personal condo insurance you need.
1. 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.
2. 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.
3. All-in coverage: An all-in policy is the most comprehensive type of master policy. It covers everything that a single entity 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 you have an all-in master policy, you may not need to add any dwelling coverage to your individual condo insurance policy.
Although HOA insurance provides some coverage for the structure of your condo, your master policy won’t cover your furniture, clothing, jewelry, electronics, and other belongings. You’ll want to make sure you have enough personal property coverage to cover their replacement cost.
Your condo insurance typically includes:
Dwelling coverage: Covers the structure of the condo unit and upgrades you made, like custom wood flooring. How much dwelling coverage you need depends on the type of master policy you have.
Personal property coverage: Covers your belongings, like your furniture, clothing, laptop, and more.
Loss-of-use coverage: Covers additional living expenses while your condo is being rebuilt or repaired.
Loss assessment coverage: Covers the remaining costs that you’re responsible for paying once your HOA master policy hits its coverage limit.
Liability coverage: Covers legal fees and medical expenses if you’re found to be at fault for someone else’s injury or property damage.
Medical payments coverage: Covers a guests’ medical expenses if they’re hurt in your home, regardless of who was at fault.
In an ideal world, your HOA insurance and your condo insurance policies would complement each other perfectly. But sometimes, you might find yourself overpaying.
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.
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 a year and as much as $1,000 a year, 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 members. That’s because, in most cases, HOA communities are gated and/or secure, so homes are less likely to be broken into.
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.
Ready to shop home insurance?
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.