HOA insurance offers protection that many community associations probably wouldn’t be able to survive without. Without coverage, the cost of repairs, injuries, and other expenses would put many communities irreversibly into the red. That is why understanding what HOA insurance covers, and how your policy choice can affect what your coverage, is incredibly important in order for communities to plan for the costs they may incur.
The Purpose of HOA Insurance
Just like how homeowners are responsible for their own homes and HOAs are responsible for common areas, the insurance that each of these groups purchases covers different areas of the community as well. Resident’s homeowner’s insurance policies protect their individual homes and possessions, and HOA insurance covers the areas and property that are owned jointly by the community and managed by the HOA.
HOA insurance policies vary in price depending on the size of the community, the size and number of its common areas and amenities, and the number of residents. The price may also be higher in some states than in others.
Types of Coverage Under HOA Insurance Plans
What your HOA insurance covers varies depending on the type of policy that’s been purchased. What state you live in can affect what insurance covers as well. Some insurance policies only cover external features such as walls and roofs, while others also cover internal fixtures as well. Some states require HOAs to purchase liability insurance to protect against injury lawsuits. In other states, having this kind of policy is optional (though given the cost of injury claims, still highly recommended). Insurance can also be purchased to cover employee injury; once again, requirements for carrying this kind of insurance vary state by state.
One of the most important things to know is whether or not your HOA insurance covers damage from natural disasters such as floods and earthquakes. Some insurance plans offer no protection at all from natural disasters; and those that do may only offer protection against certain kinds of disaster damage. When choosing a hazard insurance policy, be sure to know exactly what kind of events it covers. That way, the HOA won’t be caught off guard when an uncovered disaster occurs, and be left expecting a payment that will never arrive.