A homeowners association (HOA) is an organization that establishes rules and regulations that must be followed by members of a residential community. Failure to follow these rules usually results in fines or other punishments. If a homeowner accumulates a certain amount of monetary penalties due to fines, the HOA could sue or potentially foreclose on the property.
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If you live in a condo or another residential community that has an HOA, you may know that there is a type of insurance that provides protection against certain risks and liabilities: HOA coverage. This type of policy is known as a “master policy.” Here is a close look at this subject.
Reading: What is hoa master insurance
what is a hoa master insurance policy?
A primary HOA insurance policy is paid for by a portion of the monthly membership dues paid by homeowners within a community. the remainder of these fees is used to finance the maintenance and related expenses of common areas such as swimming pools, tennis courts and gyms. A master policy covers liability expenses associated with on-site guest injuries and physical damage to common spaces within a community. All members of a hoa typically pay the same amount for a master policy, regardless of whether they use the shared spaces within the community or not.
There are three types of master hoa insurance policies:
- bare walls in coverage
This policy offers the minimum level of coverage for a condominium structure. this coverage is specific to drywall, insulation, and studs.
This policy offers slightly more coverage than bare walls. The main difference is that it also covers the exterior of all walls to include bathroom fixtures, cabinets, and upper floors.
As the name suggests, this policy covers all items within a condo, including built-in appliances such as refrigerators, dishwashers, and stoves/ovens.
condo insurance versus hoa insurance
As structurally beneficial as HOA insurance is, it doesn’t cover occupant personal possessions inside of the home. To protect items such as electronics, clothing, and furniture, requires condo insurance which is similar in coverage to the more commonly known homeowner’s insurance. Most condo insurance policies include dwelling coverage, loss-of-use coverage, loss assessment coverage, liability coverage and medical payments coverage. This type of policy can cost up to $1,000 depending on selected coverage amounts and deductibles, among other qualifiers.
according to hoa management, a standard $1 million to $2 million general liability policy for small associations can cost between $57 and $79 per month, which works out to approximately $684 to $948 per year.
hoa’s other key insurance policies
In addition to the master policy, there are other policies that are important for a hoa to have:
property value & replacement
The minimum value for which a hoa must be insured is the full replacement cost of a property. The three main building ordinance insurance coverages are increased cost of construction, demolition, and contingent liability. This minimum may vary due to lender-specific or local requirements.
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For situations where an owner or guest files a lawsuit against the hoa, specific board members may be named in that lawsuit. A directors and officers (D&O) insurance policy can cover both the HOA and the board members. Lawsuits involving HOAs can often rack up large legal fees and damages, so it is important that the insured is adequately protected.
Other important insurance coverages any HOA should have include flood coverage, workers compensation, third-party bodily injury and employment practices liability coverage.
As with any other form of insurance, an experienced insurance representative should compare and fully explain obtaining multiple quotes, all of which are specific to your unique coverage needs. this will ensure sufficient protection for the association, its board of directors and the owners, from the main risks and liabilities.
talk to hoa insurance professionals
Contact the professionals at Pro Insurance Group for more information on HOA Master Insurance Policies. we are dedicated to serving as a one-on-one advocate for each of our clients, regardless of their unique budget and insurance needs. We also strive to form and maintain lasting relationships with our clients.
For a community with a homeowners association (for example, a condominium), a master hoa insurance policy designed for the specific association will provide substantial benefits. This type of policy offers protection against physical damage to common areas within a development, as well as liability coverage, to protect against injuries on the premises.
Call pro insurance group today at (833) 619-0770 or visit us online for more information.