What Does A Homeowners Association Insurance Policy Cover?

Every Homeowner Association (HOA) in the State of Colorado must file a set of legal documents which dictate how the entity will behave and govern themselves as a legal entity.
They can be referred to as Covenants, Bylaws, Declarations, Rules and Regulations or Governing Docs. They may all have different names but they all act a guide and a set of rules for the community to abide by.

Define Common Property and Unit Owner Property

Somewhere in those governing documents is a section  which defines ‘shared common’ spaces and ‘shared property’ in which all condo owners are allowed to use and enjoy.   And these documents will (if written properly) define ‘boundries’ in which the shared common spaces/property ends and property of the individual owners begins. 

Why is it Sometimes Called a Master HOA Policy

Sometimes the HOA policy is called the ‘Master’ policy because it is meant to cover common property and common liability of all the homeowners in the association. Having this insurance protects ‘all’ the unit owners collectively.

Most HOA insurance policies will cover:

• General/Premises Liability – to insure injuries that occur to visitors on the ‘common’ areas such as parking lots, sidewalks, pools etc
• Directors and Officers  Liability – to insure losses to third parties due to ‘mistakes’ in decision making on behalf of the HOA
• HOA Owned Property – to insure property owned the HOA such as trash cans, maintenace equipment, lawn furniture etc
• Crime – to protect the HOA’s dues/monetary funds from theft of an employee or volunteer who deals with the HOA finances
• Workers Comp – to provide coverage for injuries to ’employees’ of the HOA if they are injured on the job

Insurance Requirements in HOA Governing Docs Can Require Insurance on Different Things

Sometimes HOA governing documents will dictate that the Master policy only replace common property described as the exterior of the building and the electrical and piping that runs through the walls, but coverage stops at the drywall.  Then it’s the unit owners  responsibility to replace the interior of their own unit for building items attached to the interior such as flooring, cabinets, countertops, hvac system etc. But some HOA documents require the HOA master policy replace the ‘entire’ structure which includes all the interior building items just described.

Responsibility of HOA Board AND Unit Owners to Understand Who Insures What

It’s important the the HOA board members and unit owners thoroughly understand their governing documents and understand ‘WHO INSURES WHAT” and match the amount of insurance to replace the building either ‘with or without’ providing for unit’s interior.  If the HOA is not responsible to replace the interior building property inside the unit, it’s up to the unit owner to purchase this coverage on their condo policy also known as a HO-6 policy.

Denver West Insurance Brokers is located in downtown Golden, Colorado. We have clients all over the state and serve the communities of Denver, Lakewood, Littleton, Morrison, Arvada, Wheat Ridge, Evergreen, Westminster. Give us a call at 303-960-5290 and speak to one of our licensed agents or EMAIL US about your insurance needs.

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