Homeowners associations offer many perks, but many people might be surprised to see that it costs money to have access to these perks. Part of those costs are often HOA insurance, which benefits you in the long run—even though it might be painful to pay into it.
So, what exactly is HOA insurance and what do you get from it? Keep reading, and we’ll explore all of that and more.
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HOA stands for homeowner’s association, which is a group that provides certain services to home and condo owners in an area and sets rules and regulations that owners have to follow.
For example, if you live in a condo, you might have access to a pool, BBQ, gym, rooftop, etc. You’ll also notice that landscaping around the condo is covered, as is shoveling, cleaning of shared spaces, and more.
A homeowner’s association helps pay for and maintain these services and shared spaces. Otherwise, you and the other owners would be cleaning the pool, cutting grass, scrubbing the gym, and more! No thank you, are we right?
An HOA comes with many benefits, but unfortunately, it isn’t free. You pay dues or fees that go into maintaining the community, and part of that is HOA insurance.
More on that next.
Your HOA purchases an insurance policy and each member pays equal portions of the premiums. And if you’re thinking that you shouldn’t have to pay as much because you didn’t use the parking garage or gym at all this year, think again: each member has equal access to the shared spaces and services, so they have to pay equal fees (even if they don’t use them).
Bummer. And we have more not-so-great news for you. HOA insurance often has coverage limits, meaning that the insurance will only cover up to set dollar amounts in a claim. That means that if a storm caused $100,000 in damage to the condo building but insurance only covers $75,000, members are on the hook for the remaining $25,000 (to be split equally).
This is where loss assessment coverage comes in. More on that next.
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There’s insurance for almost anything these days. But loss assessment coverage is a good thing. It can be added to your personal home or condo insurance and it helps cover any leftover costs that HOA insurance doesn’t cover.
That means that if a claim exceeds the HOA insurance policy limits and members are required to foot the remaining bill, your loss assessment coverage would kick in and cover that remaining amount.
Loss assessment coverage is typically included in condo insurance but can also be added to homeowners insurance if desired.
Cost is usually first on everyone’s mind, but with HOA insurance, there’s no easy answer to how much it costs. This is because it depends on a wide range of factors, like where you live, the size of the building, the various amenities that might affect the building’s risk to insurers (eg. pool, rooftop deck, gym), and the actual policy that the homeowner’s association chooses.
Of course, the number of people living there also greatly impacts the cost; more people means more risk but also more people to split the fees with.
HOA insurance costs are usually bundled into your HOA fees, which include upkeep and maintenance of the property. HOA fees can range from $100 to $1,000 per month. It’s always a good idea to inquire about HOA fees before moving in so that you can budget accordingly, but keep in mind these fees can change over time.
Tip: Living in a building with a homeowners association can be a sweet deal as you get older. After all, you don’t have to worry about property upkeep and get access to great perks to keep you healthy, like a gym and pool. Budgeting for HOA fees is a smart idea as you get closer to retirement. Find more tips and helpful advice like this in our free retirement guide.
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If you have HOA insurance, do you still need condo insurance? Yes!
HOA insurance protects the building and shared spaces, but it usually doesn’t cover your individual condo and your belongings within it. It also doesn’t cover your personal liability for anything that happens inside your condo.
There are some variations of condo association insurance policies that offer more coverage. Here’s how they work:
Even if your building association has all-in coverage, you’re not fully protected. It helps to know exactly what condo insurance does cover, so you can decide if it’s worth having on top of HOA insurance.
Condo insurance covers these six buckets:
As you can see, condo insurance offers robust coverage that protects you in ways you might not even have thought of. It can give condo owners peace of mind and financial protection.
Condo insurance doesn’t replace HOA insurance, or vice versa. They work in tandem to give you the most protection possible as a condo owner. Plus, condo insurance is probably more affordable than you might think. Get access to free quotes here to find out.
If you live in a home that’s part of a homeowners’ insurance, you will still probably pay for HOA insurance. But you will also want to have separate homeowners insurance, because like in a condo, HOA insurance doesn’t cover your belongings or liability inside your home.
Plus, unlike in a condo, HOA insurance for houses also doesn’t cover the outside structure of your home. Read more on how important dwelling coverage is here.
It’s a great idea to have either home or condo insurance in place, regardless of whether or not you pay into HOA insurance.
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Your home is your sanctuary, and protecting that sanctuary is important. HOA insurance might not be optional, but it is there to protect you and your financial interests. Supplementing HOA insurance with separate home or condo insurance is also a good idea, because it offers even more protection for you than HOA insurance does.
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Lauren Lewthwaite Lauren Lewthwaite has been freelance writing for almost five years writing content that ranges from health to insurance and everything in between. Lauren is also a trained translator in French and English and is a dog-mom to an adorable Australian Shepherd.
