Does Your HOA Affect Your Homeowners Insurance?

Row of tiny homes on top of a gomeowners association contract.

Are the people in charge of making your neighborhood beautiful costing you more money than the annual fee? 

If you are a homeowner with a homeowners association (HOA), then you are most likely used to the neighborhood being a safe, inviting, and aesthetically pleasing space. Unfortunately, the average homeowner never considers whether that HOA affects their insurance, and many do not even know the difference between their private homeowners coverage and the coverage provided by the association. 

Ready to find out these important differences and maybe save quite a bit of money? Keep reading to discover everything you need to know about HOAs and homeowners insurance. 

Understanding the Concept of an HOA 

Many people don’t understand the benefits of an HOA. To fully understand and appreciate those benefits, it is important to understand exactly what a homeowners association is and how it is supposed to work. 

The short answer is that this is an organization that creates and enforces, often strictly, certain rules for living in a neighborhood or a condo building. Such rules are often aesthetic in nature, creating restrictions on how houses and yards can look.  

While some prospective home buyers resent these restrictions, others see the monthly association fees as a small price to pay for a neighborhood that is safer and more aesthetically pleasing than most others in the area. Your home’s value will increase in a neighborhood where people take care of their property. Likewise, your property value can decrease if you are surrounded by homes with overgrown yards and peeling paint. 

Ultimately, it is up to everyone buying a home to weigh the potential benefits of such an agreement against the potential drawbacks and decide what is best for themselves and their families. A major part of making that decision, of course, is understanding what will and will not be insured when you live in that neighborhood. 

The Need for Homeowners Insurance 

Whether or not you live in an area with a homeowners association, it is important to protect your residence with good insurance. In fact, some of the most important things this coverage protects against are things you might not know are vitally important. 

For example, most people count on their homeowners policy to protect their home and their personal property, and the policy is going to do just that. However, it also provides liability protection that can cover medical costs and, if needed, court costs if someone gets injured on your property and attempts to hold you liable. Considering the fact that legal action can cause a substantial financial impact even if you prevail in court, such policies can provide peace of mind. 

By the time you settle yourself and your family into a safe and supportive neighborhood, that peace of mind is more important than ever before. However, you cannot achieve that peace until you have a better idea of what is and is not covered by your insurance, and what types of homeowners insurance policies are available. 

Differing Domains: HOA vs. Homeowners Insurance 

One thing that you will want to be clear on is the difference between your personal insurance policy and that which is provided by the HOA. What does HOA insurance cover in regard to your home, and what does your own policy handle? 

The truth is that while homeowners association agreements may differ in their specific contract details, all types of HOA insurance are typically more limited than your private coverage. In the vast majority of cases, the only properties that are protected by the HOA are communal properties.  

In other words, HOA insurance will cover communal areas and provide liability protection for members who are using those areas, but all members will still need private policies to protect their own homes. 

Homeowners association booklet on desk.

Does an HOA Affect Insurance? 

If you are worried about paying too much on your premium, here is some good news: Being part of an HOA does not have a negative effect on your insurance rate. In some indirect ways, it could actually lower how much you must pay each month because safer and landscaped neighborhoods tend to have fewer claims.  

One of the only potential scenarios where being part of an association will negatively impact you when it comes to insurance is if there is some type of catastrophic event. For example, no matter how well you prepare for a tornado, there could be extensive damage to communal areas. If this happens, then you and other residents may have to pay a one-time fee to help repair or replace anything that the HOA insurance doesn’t cover. 

If you do not want that fine print to catch you by surprise at an already stressful time, make sure to read the agreement very thoroughly before you buy a home in that neighborhood. 

Navigating Through HOA and Homeowners Insurance Claims 

As detailed above, a homeowners association has its own insurance. It is possible that some of your own property may be protected under the contract that you signed with the HOA. If this is the case, you will need to go through the association to file a claim. 

Whenever possible, it is best to go with third-party coverage rather than your own, especially if your home already needs a higher coverage limit. That is because a claim filed by your HOA is not going to increase your rate, but filing with your own insurer is likely to increase your homeowners insurance rates.  

As always, it is important to read the exact details of the agreement you signed with your HOA so you know what is and is not likely to be covered. Additionally, there may be certain HOA insurance requirements to be aware of, such as certain coverage limits you need to carry on your own policy. 

Get a Free Homeowners Insurance Quote 

Now you know all about how your HOA interacts with your homeowners insurance. However, do you know where you can find the kind of premium coverage that you have been looking for? 

At InsureOne, we know that our customers expect nothing less than the very best. When you are ready to protect your home with the kind of comprehensive coverage it deserves, we are always ready for you to get a quote online. Of course, you can also give us a call at 800-836-2240. Finally, consider finding an InsureOne office near you for a face-to-face chat.