Master Insurance for HOA

Started by ChrisR5 • 7 replies • 2115 views

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ChrisR5 (Texas)
Posts: 12

Posted:

Our board is contemplating a master insurance policy for our town home HOA. We have learned that other town home HOAs in the area have them (they are optional), and that the monthly premium is fairly inexpensive, after a rather hefty deductible is met.

Do any of your HOAs have a master insurance policy? Is it supplemental and optional or required? What does or doesn't it cover compared to a personal home insurance policy? Good idea, bad idea?

Any insights would be much appreciated?

Thank you,

Chris

JonD1
Posts: 2,350

Posted:

In many cases this coverage is required under the documents. Not sure how Texas allows this to be optional or how banks will offer mortgages with no such coverage in place.

As you have townhouses under your documents there would be common property which would be the responsibility of the HOA to repair should a loss take place. Fire, explosion, hurricane, and the such. Without such coverage perhaps this cost would be divided among all the owners? In that case quite a burden.

Now inexpensive would depend on how many units and the extent of the coverage. And there are other riders that can be added to cover board members,
dishonest employees, and other risks that might add to the premium if chosen.

In today's world IMO to exist without such coverage would be a risk I wouldnot take. Perhaps you can locate an agent who offers such coverage to HOAs in your area and have them explain the coverage options and the costs to you.

ChrisR5 (Texas)
Posts: 12

Posted:

Thanks. We have insurance for commion property, board member liability, etc.., but what we are talkign about now is a master insurance policy for homeowners, that is the town homes themselves. I think it would be very difficult to require everyone to have this type of insurance on top of their homeowners insurance. Maybe it would cover things homeowner's insurnace does not and could be supplemental/optional, but I'm skeptical of it as a substitute. Chris

JimR24 (Texas)
Posts: 399

Posted:

Hi Chris - excellent question. We are a condominium association in Texas and have always had a master insurance policy. We are in our 11th year of existence.

In our case, it would be unwise for us not to have a master insurance policy - since Texas state condo law requires us to cover the inside of units (other than improvements and betterments after the original build) - in addition to all the common areas.

We recommend that our homeowners have their own individual insurance policy (although we cannot require such), which would cover contents, improvements and betterments after the original build and liability risk.

What do u think?

oljim, in texas

Quote:

Posted By ChrisR5 on 06/02/2015 5:19 AM
Our board is contemplating a master insurance policy for our town home HOA. We have learned that other town home HOAs in the area have them (they are optional), and that the monthly premium is fairly inexpensive, after a rather hefty deductible is met.

Do any of your HOAs have a master insurance policy? Is it supplemental and optional or required? What does or doesn't it cover compared to a personal home insurance policy? Good idea, bad idea?

Any insights would be much appreciated?

Thank you,

Chris

Lovin' life with my honey!
and, President of HOA in Texas

ChrisR5 (Texas)
Posts: 12

Posted:

We have our own homeowner's insurance through USAA. I would consider opting into the master insurance program if it complements my insurance coverage and covers property not covered by my policy and is affordable. I doubt we could require every homowner to drop their homeowner's inusrance to be replaced with a master policy. Talk about a logistical and PR nightmare! If the master policy provided the same or higher level of coverage for less than what we pay under our homeowners, it might be an easier sell. Make sense? Chris

JeffT2 (Iowa)
Posts: 880

Posted:

The unit owner will always need their own coverage for:
personal belongings
personal liability of the owner
items not covered by the master (carpeting?, etc)
to cover the master deductible (sometimes)
when the association does not make a claim due to the damage being less than the master deductible.

Master insurance protects the association in case a unit owner walks away with their own insurance money from a claim, leaving behind a burned out shell that no one will buy and pay dues on. The association can use the master insurance to rebuild the unit.

It also protects against uninsured owners walking away after damage.

Master insurance coverage can prevent some lawsuits.

You'll have to do the pricing research on the master and owner policies.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Chris,

Is your town home development considered a condominium or an HOA (they can be either one, depending on how they were built).

ChrisR5 (Texas)
Posts: 12

Posted:

We are an HOA. The broker met with the board last night and gave us the skinny on the program. The costs are competitive with our personal homeowner's policies, but questions remain.

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