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A Guide to Comprehensive Condo Association and HOA Insurance

For condo or homeowners associations, the need for proper insurance coverage is always prevalent. Having the right level and type of coverage limits exposure to claims during unprecedented times like with COVID-19. And quite frankly, selling Insurance Post-COVID has become a must to protect against ambiguous legal claims such as residents coming in contact with the virus because their HOA didn’t properly clean community amenities. 

HOA insurance covers physical damage to shared amenities and general liability if a resident’s guest suffers an injury in communal areas. To determine condo or HOA insurance needs, clients should look at what’s already covered by an HOA policy and figure out what they need to update or add.

Read below to get a better idea of comprehensive condo association or HOA insurance policies.

An HOA Master Policy

A community’s master policy is insurance an HOA buys to protect themselves from various exposures and claims. This policy doesn’t just serve the HOA as it also protects residents from covering the cost of liability expenses to common areas passed along in the form of special assessments.

HOA insurance policies usually include five major components:

  • Property Insurance: Property insurance covers common areas in case of flood, fire, theft, vandalism, and natural disasters. Most property insurance covers the building from top to bottom in a condo association, including exterior siding, roof, elevator, or stairs. Some policies do cover interior structures and elements.
  • Liability Insurance: Liability coverage protects clients in the case of an accident or injury on the common areas shared by the HOA. These include private roads, walkways, or hallways. Apart from insurance, HOA’s should take an active role in addressing the property’s safety issues to ensure that all residents are safe.
  • Fidelity Insurance: Fidelity insurance covers the HOA in the case of theft at the hands of employees, association members, vendors, or contractors.
  • Directors and Officers: Also known as D&O insurance, this kind of coverage protects officers and trustees from being held responsible while performing their everyday duties. Most policies pay the legal costs and fees related to defending HOA board members against any legal claim against them.
  • Workers’ Compensation Insurance: Workers’ compensation covers any employees or members of an HOA if they have an accident while working on behalf of the organization. From shoveling snow to landscaping to electrical maintenance, workers’ compensation covers potential injuries incurred during these tasks.

A Closer Look at Condo Insurance

When homeowners live in an HOA, coverage against liabilities is pretty black-and-white. Essentially, HOA insurance covers the houses and shared spaces. But when residents live in a condo association, things can be more complicated as condo owners share the actual structure.

Unit owners are typically responsible for insuring everything within the four walls of their homes. Condo association insurance provides one of three types of building coverage in the association’s master policy, including:

  • Bare Walls Coverage: This insures essential building elements, such as the walls, floors, elevators, and roofs. Unit owners must obtain coverage for items like bathroom and kitchen fixtures, flooring, cabinets, wall coverings, and appliances. Bare walls coverage may also require unit owners to insure the interior walls of their condo units.
  • Single Entity Coverage: This coverage insures the basic elements of a condo building and standard finishes inside each condo unit. Single entity coverage won’t cover improvements made at a unit owner’s expense, such as new carpet or lighting fixtures.
  • All-In Coverage: This protects installations, fixtures, or additions within the interior surfaces of the walls, floors, and ceilings of individual condos. The unit owner’s coverage needs are limited because the condo association master policy provides broad coverage for standard fixtures and finishes and additions. Unit owners must purchase coverage for their property.

About Irving Weber Associates

At Irving Weber Associates, Inc., we work with agents and brokers to access quality programs for various commercial industries across the country. For more information, visit our Condo-Homeowner Association Flyer  and our Marketing Materials page. For a detailed look at how we can safeguard your insurance services with a custom-tailored package, please contact our specialists today at (855) 764-7406.