Does an HOA Master Policy Cover Home Insurance?

Homeowners Associations (HOAs) are common in many planned communities, overseeing shared spaces and enforcing community guidelines. These associations play a role in maintaining the collective aesthetics and functionality of a neighborhood. Understanding property insurance responsibilities can be complex, as homeowners often wonder how their personal coverage interacts with the insurance policies held by their HOA.

HOA Master Insurance Coverage

A Homeowners Association’s master insurance policy provides coverage for the community’s shared property and liability exposures. This policy protects common elements and structures, such as clubhouses, swimming pools, fitness centers, and shared landscaping. For multi-unit dwellings like condominiums or townhomes, the master policy covers the structural components of the buildings, including exterior walls, roofs, and common hallways. This property coverage helps to repair or replace these shared assets if they are damaged by covered perils like fire or windstorms.

The master policy also includes liability coverage for the association itself. This protects the HOA from financial losses arising from injuries or property damage that occur in common areas. For instance, if someone sustains an injury by the community pool, the liability portion of the master policy can help cover legal and medical expenses. This coverage is specifically for the association’s property and its liability in common areas, not for individual units or their contents.

Individual Homeowner Insurance Needs

Even with an HOA master policy in place, individual homeowners are responsible for securing their own insurance coverage. This personal policy covers personal property within their unit, such as furniture, electronics, and clothing. It also provides personal liability protection for incidents occurring within the homeowner’s private unit. This means if a guest is injured inside a private dwelling, the homeowner’s individual policy would respond.

For owners of condominiums or townhomes within an HOA, an HO-6 policy, also known as condo insurance, is required. This specialized policy protects the interior finishes and fixtures of the unit, including flooring, cabinets, and appliances. Homeowners in single-family homes within an HOA community need a standard HO-3 homeowner’s policy, which covers the entire structure of their home in addition to personal property and liability. The type of individual policy needed depends on the specific dwelling and what the HOA’s master policy covers.

Understanding Different Master Policy Types

The scope of an HOA master policy varies significantly, directly influencing the individual homeowner’s insurance requirements.

Bare Walls-In Policy

This policy provides coverage only for the shared structure of the building, such as the exterior walls, roof, and framing. Under this policy, the homeowner is responsible for insuring everything inside their unit, including interior walls, flooring, fixtures, and personal belongings. This necessitates a comprehensive HO-6 policy for the unit owner to cover the interior structural elements and finishes.

Single Entity Policy

This policy offers broader protection. It covers the building’s exterior and includes the original interior fixtures and finishes installed by the builder, such as standard flooring, countertops, and cabinets. However, any upgrades or improvements made by the homeowner, like custom cabinetry or high-end appliances, are not covered by the single entity policy. Therefore, homeowners need their HO-6 policy to cover personal property and any upgraded interior elements.

All-In Policy

The most extensive type is an “All-In” or “All-Inclusive” master policy. This policy covers the building’s structural elements and often includes fixtures and improvements within individual units. This type of policy covers built-in features and even upgrades made by the homeowner. Despite its comprehensive nature, unit owners still need an HO-6 policy to protect their personal belongings and provide personal liability coverage. Understanding the specific type of master policy is crucial for homeowners to avoid coverage gaps.

Handling Insurance Claims and Deductibles

When damage occurs in an HOA community, the process for filing an insurance claim depends on the nature and location of the damage. The HOA board or property manager is responsible for initiating claims under the master policy for damage to common areas or shared structures. For damage confined to an individual unit, the homeowner files a claim with their personal insurance provider. It is important for homeowners to review their HOA’s governing documents, such as the Covenants, Conditions, and Restrictions (CC&Rs), as these documents outline responsibility for various damages.

Master policy deductibles can range from $1,000 to over $25,000, with averages between $2,500 and $10,000. When a claim is made on the master policy, the HOA is responsible for paying this deductible. If the damage originates from common elements but affects individual units, or if the claim exceeds the master policy’s coverage limits, the HOA may assess a portion of the deductible or other costs to homeowners through special assessments. Homeowners can purchase “loss assessment coverage” as part of their individual HO-6 policy to help cover their share of such expenses.