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Important Insurance Coverage for Members of Homeowner's Associations

Did you know that over 50 million American families reside in a community that’s governed by a Homeowner’s Association (HOA)?  Most condominium and townhome developments, as well as newer single-family home developments, have HOAs.  The HOA is usually founded when the development is built, and membership is mandatory.  HOAs maintain certain rules and standards that ensure the value and quality of all the properties in the development.

Often, these neighborhoods include nice amenities like maintained sidewalks, playgrounds, or even a green belt, which are declared and protected in the HOA’s bylaws. 

If you belong to a HOA, you may be at risk of receiving a “Loss Assessment” bill for thousands of dollars in the event that your association’s insurance coverage has lapsed or is inadequate to pay for a covered claim.  If a loss occurs on common areas or property owned by the HOA, each homeowner in the association may be “assessed” or held responsible for a portion of the loss.

Recently, homeowners in a local neighborhood were assessed several thousand dollars each to pay for damage done when a poorly maintained greenbelt area owned by the association slid and caused damage to a neighbor’s home. The association had been inactive for many years prior to the incident but all property owners were still responsible for the commonly owned property.  The total damage to the house amounted to $70,000.  With only 18 property owners (and HOA members) in the neighborhood, each was assessed over $3,500 to pay for the damage. 

If your home, townhome or condo is part of a homeowners’ association, please let us know. A Loss Assessment Endorsement can be added to your home insurance policy for a modest cost (usually under $25 per year.)

This endorsement will pay on your behalf for any assessment that arises from a covered peril, including liability for injuries sustained around association playgrounds, pools or pathways. (Earthquake, flood and maintenance issues would be examples of assessments not covered by this endorsement.)

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