Understanding Hazard Insurance Requirements
Your homeowners’ association Master Policy may not provide comprehensive coverage for your dwelling?
Unit owners enjoy the benefits of community living with a homeowners’ association governing community issues including insurance, most unit owners don’t understand the details of insuring their property against fire, water damage, and other hazards. A common misunderstanding is that the coverage provided by the association is inclusive of interior coverage for each individual unit.
The Master Policy approved and purchased by the Homeowners’ Association dictates what is covered, and the coverage varies on all policies. Prior to the subprime crisis of 2008, mortgage companies did not require unit owners to provide Condo owners or Townhome owners insurance; however, following the crisis, banks and mortgage companies were faced by multiple foreclosures, declined unit values and extensive damage that needed to be repaired in order to market the units for sale.
Associations carry a Master Policy which assumes responsibility for damage to the exterior structure only and liability protection is generally afforded to the association and officials acting in a governing capacity. These policies provide no coverage for the interior of the units, personal property and personal or family liability for the unit owners. The insurance available for individual unit owners as an owner occupied Homeowners Policy is referred to as a Form HO-6; this is available for Condos and Townhomes alike. The HO-6 policy features interior structure coverage, personal property and personal or family liability protection.
You may wish to obtain a Condo Owners or Townhouse Owners Insurance quote online to explore the options and limits of coverage that would best serve your needs. There is a link providing an online format to obtain a quote and buy condo/townhome insurance online in multiple States; it may be used directly by Consumers: https://hda.stillwaterinsurance.com It is important for you to include enough coverage for custom upgrades, wood flooring, window coverings, built-in cabinets, walls, and ceilings. Loss Assessment coverage is also an important option that will cover your share of assessments which might be imposed against you by the association for property or liability losses. This can be important if the association suffers a large covered loss which affects the entire community.
Your homeowners association may be helpful in providing a copy of your current Master Policy and perhaps explaining the extent of coverage provided in your specific situation. It is up to the individual unit owners to purchase their own Homeowners Insurance for the unit, personal property, personal liability and optional endorsements. The best protection against financial loss is a good insurance policy.