What Does an HOA Policy Cover?

Are you one of the 73.5 million Americans living in a community managed by a homeowner association (HOA)?

If you’re paying for HOA insurance as part of your dues and also paying for a homeowner’s policy, you might wonder whether both are necessary. If you decide to drop one of those coverages, you’ll be exposing yourself to risks. Here’s why.

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    In this article

      What is HOA insurance?

      Homeowner’s associations need their insurance to cover common areas like clubhouses, swimming pools, fitness centers and walking paths.

      The premiums are paid by the members of the association (payments from their dues). The policy benefits everyone because it allows the association to get those amenities repaired and back in operation if they’re ever damaged by a storm, fire or another covered event.

      This policy is separate from homeowners or renters insurance, but it includes some of the same types of coverage.

      If you live in a complex or neighborhood with an HOA, you might want to review the HOA policy before you buy your homeowners or renters insurance to be sure you’re not paying for duplicate coverage. If you are responsible for an HOA, you should know about this important coverage.

      What does HOA insurance cover?

      HOA insurance, by definition, is specifically designed for the needs of a homeowner’s association.

      • Property and Liability: Protection for shared spaces and structures.
      • Directors and officers coverage (D & O): liability for the association’s Directors and Officers.
      • Social Host Liability: Covers events at clubhouses, pools and grounds.
      • Garage keeper’s Coverage: Covers damage or theft to guest’s vehicles.
      • Workers’ Compensation: Covers employees who are injured on the job.
      • Discrimination Claims: Protection against suits that might be filed.

      What doesn’t HOA insurance cover?

      The coverage of your specific policy should be spelled out on your HOA master insurance declaration page.

      [ Read: Commercial Home Insurance, Explained ]

      Is my condo insurance the same as my HOA insurance?

      If you live in a condo with shared walls, those walls may be covered by your HOA insurance — to a point. Some HOA policies, called bare walls-in policy, cover the walls and what’s inside them, including the framing, wiring, plumbing and insulation. A more comprehensive policy, called an all-in policy, also covers fixtures like countertops, sinks and appliances that were in the space before you moved in.

      On the other hand, your condo insurance covers the property that belongs to you, such as your furniture, jewelry, art, electronics and any upgrades you’ve made to your unit.

      In the event of a fire, storm damage or another serious loss event, the two policies should work together to restore your building, your unit and everything inside.

      Suppose a guest gets injured in your unit, your home policy would cover anything that happens inside your unit, including your guest’s medical bills. Your HOA policy will usually cover injuries that happen in shared spaces outside of your unit, like the walkway outside or a hallway between units.

      [ Next: Home Insurance Terms You Should Know About ]

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      Average cost of HOA insurance

      The cost of HOA insurance varies according to the amount of coverage required. Some condos only have a small amount of shared space, while others have swimming pools, clubhouses, tennis courts, walking trails, dog parks and more.

      If you have a large staff of groundskeepers and handymen who must all be covered for workmen’s comp, that will raise your rates as well.

      A standard policy for a small homeowner’s association can range from $57 to $79 per month, depending on factors like the location, replacement cost of structures and payroll. That’s for a policy that covers $1,000,000 per event, with a $2,000,000 aggregate limit.

      Your state may have a required minimum HOA insurance, and your HOA’s governing documents may also specify a minimum.

      Do I need HOA insurance?

      HOA insurance may be required by state law or by the governing documents of your association. In the event of a disaster, such as a fire or major storm, an association without coverage might not be able to rebuild communal structures. The policy covers liability for injuries to guests, workers and residents in the common areas, as well as other loss events that could happen to the HOA.

      If you own a condo, or you are a homeowner who is part of a Homeowners Association, HOA insurance is probably mandatory and included in your association dues. All the homeowners in the association have to pitch in together to make sure the common areas of the property are covered.

      If you are an HOA board member, you should review state law and your governing documents for any minimum requirements and talk to your agent or broker about what coverage your association needs.

      Difference between HOA insurance and homeowners insurance

      Both HOA and homeowners insurance cover damages to structures like the roof, walls and garages. Both also cover liability if a visitor is injured on the property.

      But homeowners’policies cover the residents’ property and the interior of the unit, while an HOA policy only covers shared spaces. 

      HOA insurance includes several features that aren’t part of a standard home policy, like workmen’s comp for employees and discrimination insurance in case of a lawsuit. 

      Ideally, the two policies work together to make sure both the homeowner as an individual and the property as a whole have all the coverage they need.

      [ Read: Average Home Insurance Costs]

      How to get an HOA insurance quote

      If you’re responsible for buying insurance for your HOA, here’s how to get a price quote:

      1. You’ll need to document the current value of the shared spaces on your property. If you haven’t had an appraisal in a while, it’s a great idea to get one.
      2. Make a list of the shared spaces, structures and facilities your association owns.
      3. Review your state’s laws and your governing documents to see what minimums may be required.
      4. List your employees and other payroll information
      5. Bring all that information with you to an insurance broker and discuss your needs with them.

      [ Read: What Is Home Insurance Replacement Cost? ]

      We welcome your feedback on this article. Contact us at inquiries@thesimpledollar.com with comments or questions.

      Reviewed by

      • Nashalie Addarich
        Nashalie Addarich
        Insurance Editor

        Nasha Addarich is an editor at The Simple Dollar and a former attorney who specializes in home insurance, auto insurance, life insurance, and savings. She is a former contributing editor to Reviews.com.