Do Homeowners Associations Need Insurance?


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ByMark Fitzpatrick
Edited byJonathan Ramos
ByMark Fitzpatrick
Edited byJonathan Ramos

Updated: May 22, 2024

Advertising & Editorial Disclosure

Whether your homeowners association (HOA) needs insurance depends on the state you're in. Despite this, whether you reside in a single-family neighborhood or a condominium complex, your homeowners association (HOA) needs insurance to protect its assets and ensure the well-being of its members.

HOA insurance provides protection beyond mere coverage for common areas — it also safeguards against potential legal disputes and property damage. If you're a member of an HOA, understanding the intricacies of its insurance coverage is essential to comprehend your rights, responsibilities and financial security within the community.

What Is an HOA Master Insurance Policy?

HOA insurance, also known as an HOA master insurance policy, covers property maintenance and liability concerns within the community. Like individual homeowners, HOAs must have insurance to protect themselves and their members from potential risks and liabilities. In some states, like Alaska, California, Colorado, Connecticut, Delaware, Minnesota, Nevada, North Carolina, Ohio, Oregon, Pennsylvania, Vermont and West Virginia, having HOA insurance is mandatory.

In case of accidents or damages, HOA insurance comes in handy. For instance, if a child gets injured on a playground or a property is damaged by an unexpected disaster like an earthquake, the HOA can help pay for ensuing costs. In particular, HOA insurance covers:

  • Liability Expenses: In the event of accidents or injuries that occur within the common areas managed by the HOA, this coverage helps protect the association from potential lawsuits. For instance, if someone sues the HOA for negligence or personal injury, the insurance will assist in covering legal defense costs and settlement amounts.
  • Property Damage: A HOA insurance policy protects the common areas, such as playgrounds, swimming pools and community buildings, from physical damage caused by covered perils like fires, storms or vandalism. This coverage ensures that the HOA doesn't have to bear the entire financial burden of repairs or replacements.

Having adequate HOA insurance is vital in ensuring the association's and its homeowners' financial well-being, especially in unforeseen circumstances where expensive repairs or legal fees might otherwise burden the community.

What Does HOA Insurance Not Cover?

HOA insurance is a valuable asset for protecting shared spaces in your community, but it has its limits. It focuses on protecting common areas and doesn't extend to homeowners' personal property or liability incidents. Additionally, damages caused by floods or earthquakes are typically excluded.

In particular, HOA insurance does not cover:

  • Physical damage to homeowners’ individual houses or condos, including the interior.
  • Damages or theft of personal belongings inside a home or condo.
  • Physical damage to shared areas caused by earthquakes.
  • Liability expenses for damages caused by a homeowner or their family members.
  • Claims that exceed the limits of the HOA insurance policy.

For protection against personal property theft or damages within your property, homeowners should secure their own insurance. Remember that while HOA insurance is essential to community protection, it is primarily designed to benefit shared areas rather than individual properties.

How Does an HOA Insurance Policy Work?

Every member pays an equal amount towards the master policy premium dues, ensuring a fair distribution of costs for shared spaces and amenities. Regardless of individual usage, all members share responsibility for dues and insurance claim expenses related to common areas. For neighborhood HOAs, the master policy generally includes shared assets like pools, parks, playgrounds, ponds, gardens, clubhouses and fitness areas.

HOA Insurance vs Condo Association Insurance

Your HOA’s insurance can differ depending on whether you live in a house or a condo. While HOA insurance, or a master policy, secures shared assets and neighborhood amenities, condo association insurance covers the exterior of condo units and shared spaces. There are also different types of condo association policies: ‘bare walls,’ ‘walls-in’ or ‘all-in,’ each of which has varying coverages.

What Does a Condo Association Insurance Policy Cover?

Condo Association insurance differs from typical HOA insurance since it covers everything outside the condo unit, such as the building, exterior walls, roof, stairwells, hallways, elevators and the lobby. This master policy complements condo insurance, also known as HO-6 insurance, which covers personal belongings and interior features.

For condo owners, understanding the master policy type is essential to find the best condo insurance that complements the condo association’s policy. Generally, there are three types of condo association policies:

  • Bare walls-in coverage: This is the basic policy protecting the structure behind condo walls, including drywall, studs and insulation.
  • Walls-in coverage: Extending to the interior structure like flooring, cabinets and builder-provided fixtures.
  • All-in coverage: The most inclusive, covering homeowner upgrades, enhancements and built-in appliances.

The Difference Between Condo Insurance vs Condo Association Insurance

Condo association insurance is meant to complement condo insurance — not replace it. Below are a few critical differences between condo insurance and condo association insurance:

Condo Insurance Coverage
Condo Association Insurance Coverage

Coverage Scope

Typically covers individual units and personal belongings.

Generally covers the exterior of condo units, common areas and amenities.

Interior Coverage

Protects personal belongings and interior features.

May include basic interior fixtures provided by the builder.

Exterior Coverage

Does not cover the exterior of the condo building.

Includes the building structure, exterior walls, roof and more.

Shared Spaces

Does not include maintenance of shared spaces or amenities.

Covers maintenance and repair costs of shared spaces and amenities.

Liability Coverage

Offers liability protection for incidents within the unit.

Provides liability coverage for common areas and community property.

What Is an HOA Responsible For?

A homeowners association, or HOA for short, provides certain services in exchange for membership dues paid by residents. An HOA is governed by a board of directors elected by residents. It maintains common areas and enforces covenants to preserve the community's appearance. The HOA's primary responsibilities are centered around:

  • Management of shared spaces: HOAs are responsible for maintaining shared areas such as parks, playgrounds and pools, including cleaning and repair tasks.
  • Implementation of community guidelines: HOAs set rules to enhance their communities, covering parking regulations, landscape maintenance and exterior home appearances.
  • HOA fees and assessments: Members pay HOA fees to ensure well-maintained neighborhoods and shared spaces. These fees also contribute to the HOA's master policy insurance premium, covering common area liabilities.
  • Special assessments: If unforeseen expenses arise beyond regular dues, the HOA may impose special assessments on homeowners to cover costs.
  • Liability protection: HOAs acquire insurance coverage, including liability protection, to address accidents or damages occurring in common areas.

When it comes to HOAs, there are two main types: Single-Family Home HOAs and Condo HOAs. Each type serves different purposes and has distinct responsibilities tailored to the specific needs of its community.

  • Single-Family Home HOAs: A single-family home HOA maintains its neighborhood's aesthetics. They charge homeowners dues for common area upkeep and oversee shared assets like parks and pools. HOAs may also impose specific guidelines, such as mailbox styles, roof shingle shades and exterior paint colors.
  • Condo HOAs: Condo HOAs oversee the maintenance of condo buildings and common areas. Their rules encompass upkeep, shared space hours and regulations on smoking and vaping. Additionally, individual condo owners require HOA approval for renovations or improvements to maintain the community's high living standards.

Frequently Asked Questions

The intricacies of homeowners association (HOA) insurance can be complex. Look through our frequently asked questions to gain a better understanding of HOA insurance and its coverage.

How can you get a copy of an HOA master insurance policy?
Does an HOA master policy cover home insurance?

About Mark Fitzpatrick


Mark Fitzpatrick headshot

Mark Fitzpatrick has analyzed the property and casualty insurance market for over five years, conducting original research and creating personalized content for every kind of buyer. Currently, he leads P&C insurance content production at MoneyGeek. Fitzpatrick has been quoted in several insurance-related publications, including CNBC, NBC News and Mashable.

Fitzpatrick earned a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He is passionate about using his knowledge of economics and insurance to bring transparency around financial topics and help others feel confident in their money moves.


sources
  • Oregon Laws. "ORS 94.675." Accessed July 25, 2023.