After making the decision to join a homeowners association, your next step should be to protect all of your home assets. Overall, there are two main insurance policies necessary to cover a property loss: a master policy through the association and personal homeowner policy (called an “HO6”). The master policy is provided by your association and can vary in coverage. Generally, it always covers the exterior shell of the building/home and common areas. The interior of the unit/home, however, varies. It is very important that you understand the scope of coverage required by the association’s governing documents and therefore covered by the master policy. “Walls In,” “Studs Out,” “All In,” “All In, Less Betterments and Improvements” are common terms that mean very different things.
Often times the structural coverage of the HO6 policy is called “Coverage A” or “Real Property Coverage.” This would cover damage to the unit that is either A.) not covered by the master policy or B.) from a loss that may not reach the association’s deductible. The amount of “Coverage A” that you should carry will vary, so you and your personal insurance agent should look to the master policy to identify possible coverage gaps and recommended amounts.
Another part of your HO6 policy should usually include Liability; in many cases, this type of coverage is an umbrella policy. Should someone hurt themselves on your property, your insurance would cover the medical expenses. Liability claims can lead to expensive lawsuits that involve you and the association, so an HO6 protects you from the financial strain that follows those type of events. If your unit is left empty for long stretches of time, there could also be a tailored coverage for that situation. Finally, you should look to add “Loss Assessment” coverage to your HO6 policy and check your association’s governing documents, as it may be a requirement. Loss Assessment would cover you in the event the association assesses you for a deductible or for damages caused to Association property.
Association insurance can be complicated, so you should utilize your agent to help navigate coverage needs. Furthermore, don’t be afraid to tell your agent to work with the association’s agent to ensure all possible coverage gaps are closed.