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Homeowners Association master policy explained

A home is a major purchase. An individual considers a wide range of factors when deciding to move forward with this type of transaction. For many, this includes the acreage of the property, the number of bedrooms and the square footage of the home. Others seek out a house that has an HOA.

For those moving into a home with an HOA, it is important to understand what this means, what insurance policies cover and what coverage you might need to get individually.

HOA explained

In order to better understand HOA insurance, an HOA should be explained. In simple terms, an HOA is an organization or community where homeowners or condo owners pay fees for certain services. Additionally, the home or condo owner is subject to specific rules and regulations put in place by the member-elected HOA board.

As a member of an HOA, the fees paid are frequently used to maintain and improve common areas as well as provide security and surveillance services. Additionally, these fees also go toward a collective HOA insurance policy.

HOA insurance

An HOA insurance policy is often referred to as a master policy. Each HOA member is allowed to use the same common areas and amenities and each member pays the same amount, which goes toward the policy.

At the very least, a master policy should cover shared spaces and structures owned by the HOA. Often, members are covered for liability expenses that the HOA is responsible for, such as injuries suffered in a common area. They also frequently cover property damage to the building or shared spaces.

HOA insurance does not extend to personal dwellings. Nonetheless, HOA insurance does provide benefits to individual members when it comes to their individual coverage or filing a claim under the HOA master policy.

Legal issues

As a member of an HOA, you may encounter legal matters. Whether it is due to a member failing to pay dues, violating rules and regulations or an insurance claim is denied, moving forward with a legal action might be necessary. As such, HOA member should take the time to assess the matter, their legal rights and what options they have to resolve the matter.