There are standard questions that an HOA board, property manager, or homeowner may have when reviewing an HOA master policy. We created this explanation of common HOA property insurance terms and association details to help your community better understand what may be covered, what may be excluded, and what information can help us prepare a better insurance quote.
An HOA master policy is designed to help protect the buildings, common areas, and certain liability exposures that the association is responsible for. It may cover shared structures, common elements, and association-owned property, but it usually does not cover everything inside an owner’s unit.
Every association is different. Coverage can depend on the governing documents, property type, building features, location, claims history, maintenance, and the amount of insurance the association chooses to carry.
Here are the basic elements that a prospective insurer may need to know about your HOA property insurance needs:
Type of Community
Is the association a condominium building, townhome community, planned unit development, mixed-use property, or multi-building residential association?
The type of community matters because each association may have different ownership and insurance responsibilities. Some HOAs are responsible only for common areas. Others may also be responsible for roofs, exterior walls, shared structures, interior building elements, or certain parts of individual units.
Governing Documents
The insurer may need to review the association’s declaration, bylaws, CC&Rs, or other governing documents.
These documents help explain what the HOA is required to insure and what the individual unit owners must insure on their own. If the insurance policy does not match the governing documents, there may be confusion when a claim occurs.
HOA Master Property Insurance
This is the core part of HOA property insurance. It generally helps cover damage to association-owned property, shared buildings and common elements.
This may include roofs, hallways, lobbies, stairways, elevators, fences, clubhouses, pools, parking areas, signs, and other shared spaces. The exact property covered will depend on the association’s documents and the type of master policy selected.
Building and Common Areas
The insurer will want to know what buildings and common areas are owned or maintained by the association.
This may include the number of buildings, number of units, square footage, construction type, roof type, parking structures, recreational areas, pools, fitness rooms, gates, playgrounds, storage areas, and other shared amenities.
The more property the association is responsible for, the more important it is to review coverage limits carefully.
Bare Walls Coverage
Some HOA master policies are written on a bare walls basis.
This usually means the policy covers the basic building structure but does not cover many items inside the unit. For example, the association may insure the exterior structure, drywall, subfloor, or common building systems, while the unit owner insures flooring, cabinets, appliances, fixtures, personal property, and improvements.
This type of coverage should be clearly explained to owners so they know what their personal insurance policy should cover.
Walls-In Coverage
Walls-in coverage may provide more protection than bare walls coverage.
This may include some interior fixtures or standard finishes that were part of the original construction. However, upgrades made by the owner may still need to be covered by the owner’s personal unit policy.
Examples of upgrades may include custom flooring, upgraded countertops, remodeled bathrooms, high-end fixtures, or other improvements made after the unit was originally built.
All-In or Single Entity Coverage
All-in or single entity coverage may be broader than bare walls or limited walls-in coverage.
This type of HOA master policy may include the building structure and certain original fixtures, finishes, and permanently installed items inside the units. The exact definition should be reviewed carefully because insurance carriers and governing documents may treat these terms differently.
Even when the master policy is broad, homeowners usually still need their own insurance for personal property, personal liability, additional living expenses and certain owner-made upgrades.
General Liability Insurance
General liability insurance helps protect the association if someone claims they were injured or their property was damaged because of the HOA’s common areas or operations.
For example, a visitor may slip near a pool, fall in a clubhouse, or be injured on a sidewalk maintained by the association. Liability coverage may help pay for legal defense costs, settlements, or judgments, depending on the policy terms.
Directors and Officers Insurance
Directors and Officers insurance, also known as D&O insurance, helps protect HOA board members and the association from certain claims related to board decisions.
Board members make decisions about budgets, repairs, rules, assessments, vendors, contracts, and community operations. If an owner claims that the board made a wrongful decision or mismanaged association duties, D&O coverage may help respond to that claim.
Crime or Fidelity Insurance
Crime or fidelity insurance helps protect association funds from certain theft, fraud, or dishonest acts.
This coverage may be important because HOAs collect dues, maintain bank accounts, pay vendors, and manage reserve funds. The insurer may ask about who handles association money, whether a property manager is involved, and what financial controls are in place.
Ordinance or Law Coverage
Ordinance or law coverage may help when a covered loss requires the association to repair or rebuild according to current building codes.
For example, if an older building is damaged, the city may require updated electrical systems, fire safety improvements, accessibility upgrades, or other code-related changes. These upgrades can increase the cost of repairs.
Without this coverage, the association may have to pay some of those additional costs out of pocket.
Equipment Breakdown
Some HOA communities depend on shared mechanical or electrical systems.
This may include elevators, boilers, pumps, HVAC systems, electrical panels, security gates, fire systems, or other equipment. Equipment breakdown coverage may help with certain losses caused by mechanical or electrical failure.
This is different from normal wear and tear or poor maintenance, which is usually not covered by insurance.
Flood Insurance
Flood coverage is often not included automatically in a standard HOA master policy.
If the property is located near a flood zone, lake, river, coastal area, or area with drainage concerns, the association should ask whether separate flood insurance is needed. Some lenders may also require flood insurance depending on the property location.
Wind, Hail, and Catastrophe Coverage
Some properties may need special attention for wind, hail, hurricane, or other catastrophe exposures.
The insurer may look at the property’s location, roof age, construction type, claims history, and weather risks in the area. Some policies may include separate deductibles or limitations for wind and hail claims.
Umbrella or Excess Liability Insurance
An umbrella or excess liability policy provides additional liability limits above certain underlying policies.
This may be helpful for associations with pools, clubhouses, fitness centers, playgrounds, large common areas, elevators, events, or frequent visitors. Larger claims can exceed the limits of a basic liability policy, so higher limits may provide stronger protection.
Loss Assessment Planning
A loss assessment may occur when the HOA charges owners for part of a claim, deductible, shortfall, or uncovered expense.
This can happen if the master policy has a large deductible, if damage exceeds the policy limit, or if a loss is not fully covered. Many unit-owner policies offer loss assessment coverage, but the amount and eligibility can vary.
The HOA should understand how deductibles and possible assessments may affect homeowners.
Replacement Cost
Replacement cost is the estimated amount needed to repair or rebuild covered property after a loss.
This is not always the same as the market value, tax value, purchase price, or loan amount. Construction costs may change based on labor, materials, building codes, location, and the type of property being repaired.
An association should review replacement cost values regularly so the property is not underinsured.
Deductible Desired
The deductible is the amount the association agrees to pay before the insurance carrier begins paying for a covered claim.
Some policies may have one deductible for most property claims and separate deductibles for wind, hail, water damage, flood, or other risks. A higher deductible may lower the premium, but it may also increase the amount the HOA must collect or pay after a loss.
Previous Claims or Loss History
The insurer will usually want to know about previous claims made by the association.
This may include water damage, roof claims, fire damage, theft, vandalism, liability claims, slip-and-fall claims, or weather-related losses. A clean loss history may help the association qualify for better options, while frequent claims may affect price or availability.
Property Maintenance
Maintenance can affect both risk and insurance pricing.
The insurer may ask about roof condition, plumbing updates, electrical systems, fire alarms, sprinklers, sidewalks, parking lots, elevators, pools, and other shared property. Good maintenance records can help show that the association is taking steps to prevent losses.
What the HOA Master Policy Usually Does Not Cover
An HOA master policy does not usually cover everything inside an owner’s unit.
It may not cover personal belongings, furniture, clothing, electronics, jewelry, personal liability, temporary housing, or owner-made upgrades. These items are usually handled by the owner’s personal insurance policy.
The master policy may also exclude wear and tear, poor maintenance, pest damage, certain water damage, flood, earthquake, intentional acts, and losses above the policy limits.
Existing Policy
The insurer may ask whether the association already has a current HOA master policy in place.
They may also want to know the current carrier, expiration date, coverage limits, deductibles, premium, and whether the policy is being replaced or renewed. If the prior policy lapsed, this may affect the quoting process.
Other Features
Other features of the community may affect the premium or coverage needs.
This may include pools, gyms, playgrounds, clubhouses, lakes, ponds, gates, elevators, parking garages, security cameras, fire sprinklers, vacant units, rental units, commercial spaces, or ongoing construction projects.
Each feature may create a different type of risk that should be reviewed before the policy is issued.
HOA Property Insurance Quote
To prepare a better HOA property insurance quote, the association should be ready to provide basic property details, governing documents, current insurance information, loss history, building values, amenities, and maintenance information.
At StarNet Insurance Group, we're here to help you navigate the complexities of insurance. Please feel free to contact us with any questions you may have.
