When becoming a member of HOA, residents give some amount of money per month or year to maintain their property values and share common areas with their neighbors. HOA board members or property managers become responsible for maintaining common areas (pools, athletic courts, tennis, park, clubhouses, etc.). They manage the budget, assess HOA dues, communicate with residents, acknowledge reports, and monitor the repairing, replacing, or landscaping services. HOA management enforces the rules that the overall community should follow to maintain a safe and clean neighborhood. The money that homeowners give to HOA regularly covers the services mentioned above. But wait, do HOA fees cover insurance? HOA fees cover HOA insurance which is essential to repair damaged areas of the exterior structure.
What is an HOA Insurance Policy?
HOA insurance policy is a type of property insurance that HOAs opt for to help them cover property repair of common areas and protect HOA against liability expenses. The insurance coverage only refers to exterior structures, the areas for which HOA is responsible (common areas, outside of the condo, etc.), and HOA property insurance does not cover interior damage such as the resident’s personal property.
Why Do HOAs Need Insurance?
Without the homeowner’s association insurance, the association will need to dive into its budget allowance to pay for legal fees and property values. By having HOA insurance, you will maintain property value and will secure major assets of the community.
Property Repair – HOA insurance covers the repairs of common areas that have been damaged or harmed. If the property damage of common areas is caused by unforeseen circumstances, the association will not have to give replacement or repair out of its pocket. Instead, HOA property insurance can cover it.
Does HOA cover hazard insurance? Most communities have an HOA master policy that can cover liability and hazard insurance. However, it depends on the location of the HOAs because if the state is disaster-prone, then the master policy will typically not include natural disaster insurance, and the HOA should purchase it.
Liability – Whenever residents or guests become injured because of slipping in common areas such as playgrounds or pools, they can sue your HOA. And you can protect your HOA in a lawsuit by having an HOA insurance policy. The community must have HOA general liability insurance to protect the association from lawsuits. The same is true for condo association liability insurance which also covers legal or medical expenses whenever the association appears in a lawsuit.
How Much Does HOA Insurance Policy Cost?
Homeowners association insurance costs differ based on some important factors such as:
- The size of common areas
- The number of units
- Coverages that residents choose
- Features of units and more
The average cost of HOA General Liability Insurance ranges from $684 to $948 per year. Do HOA fees cover insurance? Yes, they cover HOA insurance costs.
HOA Insurance versus Homeowners Insurance
Having HOA insurance is not enough for homeowners. They should consider having other insurance policies such as homeowners insurance, condominium insurance, or townhouse association insurance.
Homeowners who live in condos, townhouses, or subdivisions, prefer to buy a homeowners insurance policy to cover all the fees that HOA’s insurance doesn’t include.
What is Homeowners Insurance?
Homeowners insurance is a type of property insurance that covers any damages or loss caused to the private residence. Except for HOA insurance, it is essential to have homeowner’s insurance because residents need guarantees that they can recover their belongings if the unexpected happens. This is because typical HOA insurance covers the common areas of the community and not the individual units. Also, mortgage companies require borrowers to have home insurance for financing.
What Does Home Insurance Cover?
Here are the coverages that home insurance makes:
Property Damage – When their property gets damaged because of unforeseen circumstances, such as fire or lightning, their home insurance covers that damage, including exterior and interior structure.
Personal Property – If someone enters the residents’ house and steals their property such as furniture, clothing, dishes, and more, the homeowner’s insurance compensates all.
Personal Liability – Whenever someone gets injured because of the homeowners’ property and sues against them in court, they will have an insurer who will cover the expenses.
When residents live in a subdivision, they should buy a policy that covers:
- the external structure of a home
- the interior structure of a home
- personal property
When they live in a condo or townhouse, they should buy condo insurance or townhouse association insurance that covers:
- interior of your home
- personal property
To conclude, homeowner’s association insurance is essential for HOAs as it covers property damage of shared areas and liability expenses. And whenever you need any help regarding the effective functioning of your HOAs, you can always reach out to Wall Street HOA property management for any help.