What Is Homeowners Association Insurance?

Homeowners Association Insurance, often referred to as the HOA Master Policy, is a specialized policy that is paid through your dues that is designed to protect the common areas, shared spaces, buildings within a community that an HOA owns or is managed by the HOA, liability for injuries, and Directors and Officers of the HOA. 

This type of insurance ensures that any damages or liabilities affecting these communal areas are adequately covered.

What Is Condo Association Insurance?

HOA and COA both have the same purpose only that the community is made up of condominiums. Both are often used interchangeably. 

What Is Property Owners’ Association (POA)?

From residential and commercial buildings to open spaces, businesses, and even entire towns, Property Owners Associations (POAs) govern extensive areas that may include HOAs and COAs. Often seen as advocacy organizations, POAs possess a very limited scope of enforcement power and authority.

Who Needs A Homeowner’s Association Insurance Policy?

Any community governed by an HOA, COA or POA in North Carolina should consider a comprehensive HOA, COA or POA insurance policy. This includes:

• Homeowner’s Associations (HOAs)
• Condo Owners Associations (COAs)
• Property Owners Association (POA)
• Any other residential communities with shared spaces and common areas

Why Is Insurance For Homeowner’s Associations Important?

Insurance for Homeowner’s Associations is crucial because it:

• Protects the community’s financial health by covering unexpected damages or liabilities.
• Ensures compliance with state regulations and lender requirements.
• Provides peace of mind to homeowners, knowing their community is safeguarded against potential risks.

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Is HOA Insurance Required In North Carolina?

While HOA insurance is not legally required for in North Carolina, it is highly recommended. Many Homeowners Associations do require this coverage.

Two types of business insurance that are mandatory by state law are:

• Workers’ compensation insurance
• Liability insurance for your commercial vehicle

What Does An HOA Insurance Policy Cover?

An HOA insurance policy typically includes several types of coverage. In addition to those coverage mentioned below, it may also include commercial property insurance, and liability insurance. Here’s a breakdown of the most common coverages.

Property Coverage

This covers damage to common property and structures, such as clubhouses, pools, walkways, and landscaping. It protects against perils like fire, vandalism, and natural disasters.

Liability Coverage

Liability coverage protects the association against legal claims arising from bodily injury or property damage that occurs in common areas. This can include slip-and-fall incidents or accidents during community events.

Directors and Officers (D&O) Coverage

D&O insurance protects the board members of the HOA or COA from personal liability if they are sued for decisions made while performing their duties.

Fidelity Coverage

This covers losses due to fraudulent or dishonest acts by board members or employees, such as embezzlement or theft of community funds.

Workers’ Compensation Coverage

If the HOA employs staff, Workers’s Compensation Coverage is essential to protect against injuries or illnesses sustained by employees while on the job.

Why Is An HOA Insurance Policy Important For Mortgage Companies?

Mortgage companies often require HOAs and COAs to have adequate insurance coverage as a condition for approving loans. This ensures that the property securing the mortgage is protected, reducing the risk for lenders.

What Factors Affect An HOA Or COA Policy in North Carolina?

Several factors can influence the cost and coverage of an HOA or COA policy, including:

• The size and location of the community
• The number of units within the association
• The types of amenities and common areas
• The claims history of the association
• The level of coverage and deductibles chosen