“Why do I need to have insurance if my association already has insurance?” is one of the more common questions we hear those living within an association ask. There are a few answers to this question:
- The associations insurance generally covers common areas and commonly owned association property only – this does not include your individual home.
- Even if the associations insurance covers part of what you consider your home, they will not insure your personal property or your liability.
- You don’t want to rely on someone else to cover your exposure. The old saying, “trust but verify” comes to mind here. You can trust that your association has the proper insurance, but you verify that you’re properly covered by purchasing your own insurance.
“What does my association cover for insurance purposes?” is another common question we hear. In order to properly advise anyone asking that questions we need to review your associations bylaws and insurance documents. However, in the spirit of this blog, I can offer some general ideas about what should be covered by your homeowners associations insurance.
Generally speaking, your homeowners association is responsible for insuring common areas and association amenities (ex. guard house, tennis courts, sidewalks, etc.). In some cases, if your HOA is a townhome, villa, or attached structure, then your association may cover the exterior of your structure for insurance purposes. However, in this situation, your associations documents will dictate what property is specifically covered.
One important, but sometimes forgotten, coverage for most homeowners is Loss Assessment coverage. Under your homeowners or condo insurance policy, this covers you up to a specified dollar amount listed on your insurance policy declarations page. It helps insure common areas of properties that are collectively owned by members of a homeowners association, covering shared financial responsibilities that might arise in a claims process.
For example, a number of years ago my Papaw (that’s Indiana for Grandfather) received an assessment for quite a bit of money that was outside of the annual dues he received. His association had damage that needed to be fixed, and since the associations insurance did not cover the damage, they passed that cost on to the associations residents. If he had purchased Loss Assessment coverage, his out of pocket cost would have been dramatically reduced, if not zero. Unfortunately, that was not the case and he was on the hook for the complete amount.
These are just a number of things for you, the homeowner, to be aware of when it comes to making sure you’re most valuable asset is properly protected. An informed insurance consultant can help you navigate these and many other issues surrounding homeowners and association insurance. Contact your consultant today to ensure your peace of mind!
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Written by Robbie Korth
If you have any questions, please feel free to contact Robbie Korth at firstname.lastname@example.org