Important protections in the HOA’s master insurance policy
Does your HOA carry a master insurance policy? If you live in an HOA with shared common elements the answer should be “Yes!” You need additional protection apart from your personal homeowner’s policy when living in a community with shared amenities and facilities. Get to know the “master” just a little bit better and relax knowing that you’re covered when the unexpected happens. What is the “master?”
In insurance policy terms, this policy protects all of the common areas that you and your fellow homeowners are responsible for maintaining. These areas a places where you, your visitors and invitees access while on the association’s property. Roofs, lobbies, stairways, elevators, basements, common walls, etc. are the places typically covered by the master insurance policy.
A good master policy includes liability insurance that accommodates claims against injuries involving residents or guests that occur in these areas. For example, if the flower girl at a wedding slips and falls on rose petals in the elevator, the “master” policy protects you, fellow homeowners and the association against any claim brought by her parents.
The master insurance policy must be current and in force at all times. Lenders make it easy for HOAs to stay insured by requiring proof of adequate coverage before they approve a mortgage loan. Fannie Mae and Freddie Mac demand at least one million in a master liability insurance policy before approving a residential real estate loan for property in a homeowners association.
Look to your association’s CC&Rs (covenants, conditions and restrictions) to determine what the HOA master insures for your benefit. Understanding the limitations of your personal policy and the ramifications of the master policy will help you sleep at night and stay covered!
Between your personal policy, and the “master” you can rest comfortably knowing that your property is sufficiently protected against loss, and will not lose value because of an unexpected accident or disaster. The “master” is a must if you live in a community with common areas and shared amenities.