If you live in a community with a homeowners association (HOA), you're no stranger to monthly dues. But have you ever stopped thinking about what those dues pay for? Beyond the maintenance of your community pool and manicured lawns, a significant portion goes toward an HOA insurance master policy.
This policy is a critical piece of the puzzle, protecting your community's shared spaces and your association from significant financial risks. But what does it cover, and more importantly, how does it affect you as a homeowner? Let's break it all down in simple, easy-to-understand terms.
An HOA insurance master policy is the commercial insurance your homeowners association maintains for the entire property. Think of it as the 'big picture' policy that covers everything you and your neighbors share. This includes the building's exterior, common areas like lobbies, hallways, and elevators, and amenities such as a clubhouse, gym, or swimming pool.
The policy's primary purpose is to safeguard the association and its members from financial loss due to property damage, accidents, or lawsuits that occur in these shared spaces.
While specific coverages can vary, a typical condo master insurance policy provides two main types of protection:
Not all master policies are created equal. The type of policy your HOA has will determine what is covered inside your individual unit. Understanding the difference is vital for knowing where the HOA’s coverage stops and where your personal condo insurance (also known as an HO-6 policy) needs to begin.
Just like your personal car insurance or homeowners policy, an HOA insurance master policy has a deductible the amount the HOA must pay out-of-pocket before the insurance company pays a claim.
If a major claim occurs, the deductible can be substantial. In many cases, the HOA will charge a "loss assessment" to all unit owners to cover this deductible or any costs that exceed the master policy’s coverage limits. For example, if a fire causes $150,000 in damage and the HOA’s master policy has a $50,000 deductible, each unit owner would be assessed a share of that $50,000.
This is where your personal condo or homeowners insurance becomes a lifeline. Many individual policies offer a "loss assessment coverage" endorsement that can help cover your portion of the fee, saving you from a significant and unexpected out-of-pocket expense.
Think of it this way: the HOA insurance master policy covers the collective building, the shared spaces, and the association's liability. Your personal homeowners or condo insurance (HO-6) covers the individual your belongings, the inside of your unit, and your liability. They are two separate, but equally important, forms of protection.
You can typically request a copy of the policy summary from your HOA board or property management company. Many associations also make these documents available through their online member portal or website.
Yes, in most cases, the HOA’s governing documents (bylaws and CC&Rs) grant the board the authority to levy loss assessments on residents to cover deductibles or other uncovered costs. This is why understanding your HOA's policy and having adequate personal coverage is so important.
Navigating the complexities of HOA master policies and personal coverage can feel overwhelming, but you don't have to do it alone.
At Majdas Touch Insurance, we specialize in helping HOAs and individual homeowners understand their unique insurance needs.
Don't wait for a loss to discover you're underinsured. For a simple, stress-free consultation, reach out to Majdas Touch Insurance today. We’ll help you protect your biggest investment with the right coverage for your unique circumstances.
Contact Majdas Touch Insurance today for expert advice on any potential coverage gaps based on the season, and find the right solutions for your unique needs. We're here to help you understand all your insurance needs, from your pets to your financial future with life insurance policies.
We're here to make securing your insurance straightforward.
For a deeper dive into loss assessment coverage, this resource is a must-read: What Is Loss Assessment Coverage for Condos?.
