Chances are, if you live in a neighborhood or a condominium, or even if you own a timeshare or cooperative, there is a group that oversees the standards and covenant of that community. General known as homeowners associations (HOAs), this group may provide benefits such as common space and community upkeep, neighborhood events, shared amenities, and group guidelines. You likely pay dues to be part of this group, and you probably agreed to abide by the guidelines when you moved into the home. But with those benefits also comes some liabilities. Who is protecting you and your neighbors from those risks? Here are some of the most common:
Common Space Liability – If you share a common space with your neighbors, whether it be a dog park, greenway, playground, picnic area, or more, there may be shared liability for injuries that occur in those spaces.
Shared Property Damage – If your neighborhood or condo shares property or a building(s), an HOA policy may cover property damage to that shared risk should it occur. For example, if a fire destroys the community’s gym, an HOA policy would likely come into play for recovering on a claim.
These HOA policies are also called master policies, and there are different types commonly found. For single-home neighborhoods or subdivisions, the master policy typically does not extend the homeowners coverage, but rather covers the common areas and shared liability only. For condos, there are typically three types of master policies:
Bare Walls Coverage – Typically covers the basic structure of the condo.
Single Entity Coverage – Typically covers the basic structure plus entire walls, cabinets, and fixtures.
All-in Coverage – Typically covers everything a single-entity master policy covers, but also extends to built-in appliances.
It’s also important to note that with a master HOA policy, the adjusting of claims is based off how the master deed and bylaws of the association are written. Members of the HOA should read these very carefully to be sure that their individual units are insured correctly.
In addition to these coverages, there is liability for the Board of the HOA and other risks that may need to be addressed. We’ll review those in a future article, but if you need to learn more about HOA risks and policies, please contact our specialist Brandon Patterson at 865-453-1414.