Homeowners associations (HOA) are responsible for buying insurance that covers all public areas of a development. Individual homeowners need to insure only their own units.
HOA Master Insurance Policy
Many HOAs carry what's known as a "master policy." This policy typically covers the parts of residential structures shared by all homeowners, such as roofs, common walls, lobbies, stairways, elevators, and basements. HOA governing documents should state exactly which areas the HOA insures.
You'll want to verify that the HOA master policy covers everything it's supposed to cover. If anything is left out of the policy, your investment in your home may be at risk.
Policies to Protect Homeowners From Lawsuits
Some states require that HOAs have insurance that pays the costs of lawsuits filed against homeowners by people who are injured or killed on the property. For example, suppose the elevator in your building malfunctions and injures someone. The injured person can sue and win a substantial amount of money in court. If your HOA insurance lacks this coverage, you and other homeowners might be responsible.
Liability Insurance for HOA Employees
Key HOA employees are responsible for making important decisions about how to manage the property. When an HOA employee fails to do something or acts in a way that causes damage to someone, the HOA may be sued. In some cases, the employee can be sued as well.
As a result, many HOAs take out an insurance policy that protects employees from having to pay lawsuit settlements when they make mistakes. You and your fellow homeowners pay for all of these insurance policies as part of your fees.
HOA Fails to Obtain Insurance
Your HOA should protect your interests as a homeowner. If your HOA purchases inadequate coverage or none at all, or fails to keep up with premiums, it jeopardizes the investment you've made in your home. If the HOA's governing documents require the purchase certain types of insurance, you have the right to make sure that the HOA does what it is supposed to do.
A Real Estate Lawyer Can Help
The law surrounding HOA duty to insure property is complicated. Plus, the facts of each case are unique. This article provides a brief, general introduction to the topic. We hope you found it useful. For more detailed, specific information, please contact a real estate lawyer.