Does Your HOA Affect Your Homeowners Insurance?

What if the reason your premiums keep going up has been staring you in the face every single day? 

You rely on homeowners insurance to protect your house from theft, accidents, and so much more. But if you live in a homeowners association, this may have an impact on how much you pay each month. Sometimes, that impact is positive; sometimes, though, it is downright negative. 

How do HOAs even work, though? What is it about them that can potentially drive your premiums up? Most importantly, what should you do if you think you are paying too much for your homeowners insurance? Keep reading to find out. 

What Is a Homeowners Association and How Does It Work? 

A Homeowners Association, or HOA, is the governing body of various condo associations, gated communities, and planned neighborhoods. This organization is responsible for the upkeep of various shared community features such as swimming pools and clubhouses. An HOA also enforces rules that members must abide by and handles things like community landscaping in an effort to give the entire area a more uniform look. 

Speaking of uniform looks, one major function of an HOA is managing the overall aesthetic of the neighborhood. The association will determine what colors you can paint your home and how often you will have to mow your lawn. Such aesthetic management is one of the reasons that HOAs are so controversial. Some homeowners like how an HOA creates beautiful, ordered neighborhoods; others see the regulations on things like house color and lawn decorations as unnecessarily restricting their creativity. 

HOAs are generally associated with planned neighborhoods, and you likely have several of them in your city. But you may also find these associations in gated communities, condos, and anywhere else that residents want to protect home values and create a sense of community by forming an association. 

What Does an HOA’s Master Policy Usually Cover? 

The HOA master policy is designed to protect the shared features of the neighborhood. For example, these policies protect against damage or liability claims related to pools, gyms, clubhouses, and so on. This extends to other shared features, often protecting against damage to things like shared fences. Of course, it all depends on the type of policy the association has taken out; just as there are different types of homeowners insurance, there are different types of HOA coverage. 

• Bare Walls Policy: The coverage only protects certain structures and shared spaces. It does not, however, protect the interior of any home.
• All-In or Comprehensive Policy: Covers exterior spaces and certain interior features. This may include interior walls, fixtures, and/or plumbing.  

To understand what kind of policy protects your own neighborhood, it is important to review all relevant paperwork before you decide to join an HOA. 

How Your HOA Can Influence Your Home Insurance Rates 

A homeowners association can influence your home insurance rates in both positive and negative ways. For example, it may indirectly lower your premiums because of neighborhood security features (like gates or guards) and strict maintenance schedules. These both make your home look much safer in the eyes of insurance companies, and they are correspondingly more likely to offer discounts that will lower how much you have to pay on your monthly premium. 

However, if your carrier is unimpressed with the HOA insurance requirements, they may think the area is risky, causing higher insurance costs and a correspondingly higher premium. Additionally, your cost could go up because neighborhood features like pools increase your liability risk. Finally, if your neighbors have collectively filed a large number of claims, insurers may see the area as risky and increase your insurance rates. 

Remember, you can always get free quotes from other carriers, and you can switch insurance providers at any time. So even if you are stuck with a homeowners association, you may be able to make the switch and ultimately pay less on your premiums each month. 

The HOA Master Policy 

One thing that every association has in common is the HOA master policy. This is the group insurance policy that specifies what is and is not covered by your fees. Think of this like any other insurance document: It is vitally important for you to understand this document before you rely on it to protect you. 

Understanding Loss Assessment Coverage 

Living in a homeowners association means you benefit from the collective protection of shared areas like pools, gyms, and clubhouses. But if a shared space is damaged and repairs cost more than the HOA policy will cover, then residents will have to pay for their share of the repairs out of pocket. If you have a loss assessment coverage rider, though, you may be exempt from having to pay anything extra. 

Are such riders worth it? If nothing else, they will give you peace of mind. But whether or not you will ever need to use it may come down to how often the homes in your HOA are damaged by natural catastrophes (ask yourself: Are you really prepared for a tornado?) and various other covered (and non-covered) perils. 

Protect Your Home (and Your Community) With InsureOne 

Now you know more about how an HOA can affect your homeowners insurance. This includes what an HOA is, how it works, and how these associations can both raise and lower your monthly premiums. But do you know where you can find a provider who provides the coverage and customer service you deserve, no matter where you live? 

At InsureOne, we specialize in protecting homeowners just like yourself. You never know what the future may hold, which is why it is important to protect yourself and your family with the most reliable name in the insurance business. When you are ready for industry-setting white glove service, come get a quote online. If you would rather talk to a friendly neighborhood agent directly, you can also give us a call at 800‑836‑2240. Finally, we would be delighted if you found an InsureOne office near you so we could meet our new favorite customer in person. 

FAQs 

Does HOA Insurance Cover My Roof? 

Your HOA insurance is much more likely to cover your roof in the event that you live in a condo or townhome, which is where this part of your home is considered a common element. If you live in a single-family home, it is much more likely that your roof will be covered by the standard homeowners policy. 

When in doubt, always check the governing documents of your association to verify what is and is not covered. Depending on what is and is not covered, it may be wise to go ahead and invest in a new roof rather than waiting for the old one to succumb to damage, possibly endangering you and anyone else inside the home. 

Can My HOA Require Me to Have Homeowners Insurance? 

Yes, your homeowners association may require you to have homeowners insurance, even on properties that you own outright. The logic here is that damage that occurs to one house is likely to spread to others. Therefore, requiring everyone who owns a house to take out their own coverage is a way to keep the entire neighborhood safe. 

Some homeowners get annoyed by the idea that an HOA could force them to take out coverage they do not necessarily want. However, for most people, a home is the biggest investment of their lifetime. Therefore, it is always important to have an insurance policy to protect yourself, your family, and your belongings in the event of disaster. 

What Happens If HOA Insurance Does Not Cover All Damages? 

If HOA insurance does not cover all damages, the financial responsibility typically falls to everyone who is part of the association. After committing a loss assessment, your association will levy specific fees that you and other residents must pay for the remaining repairs that were not covered by the group policy. 

If you are worried about such fees, you may wish to invest in a loss assessment coverage rider. This may prevent you from having to pay anything. 

Does Living in an HOA Lower My Premium? 

It is possible that living in a homeowners association will lower your premium because certain security and maintenance features may qualify you for certain discounts through your carrier. However, your premiums may go up if your association has high master policy deductibles or passes fees to offset increasing insurance costs. This is one reason why it is so important to check the fine print of an HOA long before you buy a home in such a neighborhood. 

Do I Need Different Coverage for a Condo vs. a Single-Family Home? 

Those who live in a single-family home typically only have to take out a standard homeowners insurance policy that protects the structure and everything in it. But if you live in a condominium, you will likely need a special condo insurance designed to protect the interior of your own home and belongings without extending that protection to the larger structure.