Homeowners associations (HOAs) purchase insurance to cover the cost of repairs to the areas and structures they are responsible for. The insurance also provides liability protection for injuries that occur in common spaces, such as swimming pools. HOA board members are responsible for purchasing the insurance and paying the policy premiums using funds from the dues paid by its members. Since all HOA members have equal access to common areas, they each pay an equal share of the HOA insurance policy.
Single-family home HOAs are responsible for maintaining the aesthetic look of the neighborhood by charging homeowners dues to maintain common areas and overseeing the maintenance and operation of shared community amenities like parks and pools.
Condo HOAs oversee the upkeep and maintenance of the condominium building, as well as common areas used by residents. These HOAs may also have their own rules regarding the use of public places shared by owners.
Homeowners associations—whether it’s for condominiums, planned communities, or townhouses—need insurance coverage to protect their property and members. One of the most essential coverages required by homeowners associations is an HOA master policy, which provides coverage against property damage, and liability claims from visitors or HOA members. Though commercial property insurance policies can protect the buildings owned by the HOA, it’s important to note that it only covers the structure and not the personal contents of residents.
Homeowners associations are responsible for the safety and well-being of their residents and visitors. In the event of injuries sustained by visitors in the HOA’s common area, liability coverage would kick in to cover medical claims and potential lawsuits. Directors and officers liability insurance (D&O) protects the board members’ assets if the organization is sued for alleged acts of wrongdoing. Crime insurance may provide coverage to protect the HOA in the event of crimes by either a third party or an employee, depending on the policy.
HOA policies cover the organization against liability claims from personal injuries and property damage in the common areas owned by the HOA. However, it’s important to note that homeowners association insurance only covers structures owned by the HOA and not the personal belongings of residents. If a resident doesn’t have the appropriate coverage for their personal belongings, they won’t be covered under the HOA’s policy. The minimum coverage requirements for HOA members may vary by community, and the HOA’s governing documents will determine what is covered by the HOA and what HOA members are responsible for.
To provide additional protection, homeowners associations may consider other policies such as workers’ compensation insurance, which covers medical expenses for employees and/or uninsured vendors that perform maintenance and are injured on the job. A cyber liability insurance policy could benefit the HOA if personal information is stored on its computer network. Additionally, a social host liability insurance policy is helpful if the HOA allows members to host events at HOA-owned buildings or common areas, as it provides coverage from potential liability claims.
If you have questions or need homeowners association insurance for your HOA, please contact Nesbit to discuss your options.
