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The HOA’s master policy should provide coverage in the event of damage to the parts of the property shared by all owners, such as roofs, common walls, lobbies or atriums, stairways, elevators, basements, fitness centers and pools, ponds or lakes, playgrounds, and clubhouses.

Damage might be caused, for example, by wind, fire, flooding, or criminals and vandals. (Watch out for exclusions, however; for example, it’s often necessary to buy separate flood coverage, and flooding is among the U.S.’s most common natural disasters.)

For condominium owners, this insurance is often referred to as “walls out” coverage, since everything within the walls of the owner’s unit is usually that person’s individual responsibility.(But in some condo policies, the interior, “bare” walls are covered by the HOA master policy as well.

Your HOA’s governing documents should state exactly which areas the HOA policy insures. You’ll want to take a close look and consider what is left out or what not to buy duplicate coverage for.

Your HOA should also purchase general liability insurance to pay the costs of any lawsuits for medical expenses filed by people who are injured in the common areas of the property.

For example, suppose the elevator in your building malfunctions and someone breaks a leg as a result, a visitor slips on ice on a common pathway, or someone’s grandchild nearly drowns in the community pool. The injured person can sue and win a substantial amount of money. If your HOA insurance lacks this coverage, you and other homeowners might instead be responsible for the medical payments.

Ideally, the HOA’s liability insurance will also include “directors and officers” coverage. This will kick in if someone sustains loss or damage due to the HOA management mishandling funds or acting in otherwise negligent manner.

  • Directors and officers liability insurance can help cover costs if lawsuits or dispute claims are filed against an HOA’s board members.

Additional liability coverage can be added through an Umbrella policy for the association as well.

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