There are numerous benefits that come with being a part of a homeowner’s association. This is why so many homeowners choose to purchase properties within these areas. Aside from the positives, though, there are always negative aspects of every arrangement, especially when it comes to your home.
Homeowners should always be aware of what is covered under the umbrella of their community association’s insurance and learn how to protect themselves accordingly when it falls through. Keep reading to find out what your community association might not tell you about your insurance.
What is a Homeowner’s Association? (HOA)
The definition of a community association is a very straight forward one. It is essentially a network made up of everyone who owns a home in a particular neighborhood. Community associations, also known as Homeowner’s associations (HOA) are non-profit, only benefiting those who live there.
If you purchase a home or a condo in one of these areas, you are a part of the association with no additional action necessary. Not every development will have an HOA, but the percentage of those that do is increasing by the year across the United States.
The role of a community association is basically a governing body over all of the homes in the area. The HOA is held together by a clear set of rules and regulations that everyone is expected to follow. In addition, there are covenants and conditions that apply to all properties and owners under the association.
The Benefits Of Living Under a Homeowner’s Association
One of the best things about living under a community association is the fact that all properties are protected when it comes to both value and safety. More specifically, the role of the HOA is to enforce standards of maintenance to properties and grounds, upholding the appearance of the community as a whole.
Additional amenities are also typically added to communities under an HOA, including common areas, tennis courts, pools, guarded gates, and more, all increasing the property values and safety of residents.
The Disadvantages Of Living Under a Homeowner’s Association
While living in a community association can be a positive experience for the most part, it does require a lot more effort to keep a property in line with the rules and regulations that are set in place.
In addition, there are certain restrictions on activities that are not considered acceptable within the association. For instance, if you have a boat in the summer, you most likely will not be allowed to park it in front of your house on the street.
As the owner of your home or condo, this can be bothersome, as you have full ownership of your property but might not be able to do everything as you please. However, everyone under the association is limited from doing the same activities to keep order throughout the community.
Everyone who lives within an association is expected to pay an HOA fee, which goes toward community expenses and some insurance coverage for homeowners. However, your HOA might not tell you everything that you need to know about what their insurance covers and the limitations it comes with.
What is My Homeowner’s Association Not Telling Me About Insurance?
While it is true that all members of a community association are required to pay an HOA fee, including insurance costs, this does not necessarily mean that all needed coverages are included. Here are some things to keep in mind about insurance as a homeowner that your HOA might not tell you:
HOA Insurance is Separate From Home Insurance
Monthly HOA fees, which typically amount to a few hundred dollars or less, are composed of expenses that help uphold community standards. A small portion of this fee also contributes to HOA insurance that covers everyone in the neighborhood.
What most homeowners are not aware of is the fact that HOA insurance is entirely separate from individual home insurance policies. https://smartfinancial.com/how-is-homeowners-insurance-different-homeowners-association-insurance-hoa
- Monthly premium paid to the insurance company
- Covers interior and exterior of the property
- Deductible required when filing a claim for damages
- Not required if you fully own your home
- Full coverage for damage/loss depending on the policy
Home insurance is acquired by paying a monthly premium to a private insurance company. This typically covers the interior and exterior of the property, including all valuables.
When you file a claim for damage with your home insurance company, you will be required to pay a deductible in order for your insurance coverage to pay for the remaining repairs and replacements.
Home insurance is not required if you fully own your home, meaning that you no longer have a mortgage payment. However, this is something that you should always have access to, as the average home insurance policy will offer full coverage for many types of damage and loss that are out of your control.
Homeowner’s Association Insurance:
- Included in monthly HOA fee
- Focused on common areas and exterior building features
- Mandatory payment every month
- Minimal/no coverage for personal property damage/loss
Community Association (HOA) insurance is also paid monthly, included in the routine HOA fee. Instead of covering all types of damage or loss, this type of insurance focuses on common areas and exterior building features.
While home insurance is optional in some cases, members of the association do not have a choice of whether or not they would like to pay it. Unfortunately, there is minimal to no coverage for personal property that is lost or damaged within the home.
What Does my HOA’s Insurance Actually Cover?
There are many misconceptions among homeowners about what is actually covered by HOA insurance. While the correct answer to this question will vary between communities, it is always a good idea to educate yourself on what should be expected. https://homeguides.sfgate.com/hoa-condo-insurance-cover-52025.html
This is what your HOA insurance definitely covers:
- Common areas and grounds
- Exterior walls
No matter where you go, your HOA insurance will almost definitely cover all common areas and grounds, the exterior walls of your home or condo, and any roof damage that might occur. The association is mainly concerned with the outer appearance of the community, so they will cover damages accordingly.
This is what your HOA insurance might cover:
- Interior walls
- Interior floor/ceiling
While it is not standard, select associations may extend their coverage from the exterior and common areas to the inside of homes and condos. However, this coverage is usually limited if it even exists. Your HOA might cover the walls, floor, and ceiling of your home, with the possibility of some fixtures and appliances being included.
This is what your HOA insurance definitely does not cover:
- Loss/theft/damage of personal property
- Protection against injury lawsuits
Even though all HOA policies are different, there are a few things that these types of insurance will absolutely not cover. This includes any kind of loss, damage, or theft of personal property, as well as protection against any lawsuits if someone is injured in your home.
Your Home Damage Claims Are Affected
Among the most important facts to be aware of surrounding HOA insurance is that your individual home damage claims will always be affected. In normal circumstances, you would call your private insurance company to file a claim after suffering damage to your property.
When you live in an association, you will need to first decide who is responsible for what happened. This might result in contacting your HOA and working through their insurance to acquire your settlement instead. https://www.fllitigation.com/hoa-affect-homeowner-s-damage-insurance-claims
It is increasingly important to file correctly in the event of damage to your home, as the consequences of any mistakes can be much worse than what has happened to your home. Filing a claim with your insurance company mistakenly when it was really the responsibility of your HOA will most likely result in your rates being increased.
If you live in a property that is connected to others, such as a condo or a townhome, you might end up needing to file a claim against the person next to you if they are responsible for the damages you are experiencing, instead of consulting the HOA or your own personal policy.
How Do I Protect My Home in a Homeowner’s Association?
As you can see, there are a number of things that can go wrong when dealing with association insurance that is not your own. Before you find yourself in a predicament, you can take the below actions to protect yourself and your property.
Understand What Is Covered and What Is Not
The first thing that you should do after you join a community association is to understand what exactly is covered under the HOA’s insurance policy and what is not. This way, you will be able to set realistic expectations for yourself and supplement what is missing with your own insurance policy. https://www.esurance.com/info/condo/hoa-insurance
Here are the questions you should be asking about your HOA insurance:
- What kind of master policy is held by the HOA?
- What level of liability is covered under HOA insurance?
- What are the limits of the association’s insurance policy?
- Are there any limitations/regulations for my individual insurance?
- Can the association’s insurance policy help me with interior renovations?
By finding this information, you will have a better understanding of what your HOA will pay for in the event of damages and what you will be responsible for as the homeowner.
Should I Get My Own Home Insurance?
It is true that HOA insurance will take care of some things surrounding your property, but coverage is very minimal in reality. In the event that something serious happens to your home, beyond what the HOA is responsible for, you will need your own private insurance policy to be on your side.
This is what the typical home insurance policy covers, that HOA insurance will not:
- Repair/replacement of damaged property
- Loss in the event of a disaster/theft
- Accidental damage to a neighbor’s property
- Injury of visitors on your property
Home insurance policies essentially cover instances that you could not have planned for as the homeowner. These events include theft and natural disasters such as hurricanes or fires.
If you accidentally damage your neighbor’s property, your homeowner’s insurance will be the one to help you out. This also applies to any visitors that are injured on or inside your property.
Think of your home insurance as a safety net, placed under your HOA insurance. While the fee that you pay to your association will take care of the appearance of your community as a whole, it will often fall through when it comes to your own property, which is where your individual policy comes in to save the day.
As a homeowner, you should always have your own insurance policy to cover any additional damages that extend past the capabilities of your HOA insurance.
Hire a Public Adjuster For Home Insurance Claims!
Living within a community association can get rather complicated, especially if you are not an insurance expert. This is why it is so beneficial to have a trustworthy public adjuster on hand to assist you with all of your insurance needs.
In the event that you need to file a claim for home damage, your adjuster will be able to determine the correct way to do so, avoiding any potential mistakes. Throughout the process of the claim, they will speak for you, ensuring that you get everything you need from your insurance company to fix the damages.
Along with understanding your HOA insurance and holding your own individual policy, having a public adjuster in your back pocket is more than enough to protect yourself against anything that is thrown your way as a homeowner.
Reach out to Bulldog Adjusters to find out how we can help you handle the hassle of your home insurance company. Here at Bulldog Adjusters, we work our hardest to make sure that you get the largest possible settlement from your insurance company!