Understanding the Difference Between HOA and Homeowners Insurance

When a homeowner moves into a community that’s governed by an HOA, he or she is usually relieved to find that the HOA carries its own, HOA insurance policy—but does that mean that the resident no longer needs a separate homeowner’s insurance policy?

The answer to this question is a resounding no. There are key difference between HOA and homeowners insurance policies. The HOA policy should provide residents with a certain level of security, but, without their own homeowners insurance policy, they will be woefully unprepared should some sort of disaster strike.

Here is a quick rundown on the differences between these policies. The HOA is a non-profit legal entity that’s tasked with protecting the property values of homeowners within the community. Part of this means obtaining an insurance policy that protects the community; as for how much coverage must be offered, that is a matter that should be addressed in the HOA’s governing documents.

These HOA insurance policies will typically cover damage done to shared, common areas of the community; residents should not assume that this insurance also covered private property, like their actual homes. It is vital for homeowners to carry their own insurance policies, addressing the following areas: The primary dwelling; separate buildings, such as a free-standing garage or guest house; and personal property inside the unit, like appliances.

Additionally, homeowners may want to consider Loss of Use coverage, which kicks in if the house becomes uninhabitable, due to something like a flood or a major fire. Personal Liability coverage should also be considered.

Again, the HOA’s role is to protect property values within the community itself. Having common areas covered by insurance policies helps a great deal with this. This is not the only kind of insurance that homeowners will want to obtain for themselves, though. Getting individual protection for their personal property is a must!

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Bryan Kuester

Bryan Kuester

Bryan is the CEO of Kuester Management Group. He has over 15 years of managing community associations throughout North and South Carolina.

His specialties include Community Association Management - maintenance, budgeting for operational and reserve funding, long-range planning, covenant enforcement, amenity management, onsite management, large scale management.