Homeowners Insurance vs. HOA Insurance: What’s The Difference?

by | Jul 15, 2022 | HOA Life

Many people don’t know the difference between homeowners insurance vs. HOA insurance.

When you are a homeowner, it is important to have homeowners insurance. This type of insurance protects you if something happens to your home.

But what if you are a part of a homeowners association (HOA)? Do you still need homeowners insurance? Or is HOA insurance enough?

This article will discuss the difference between homeowners insurance and HOA insurance. We will also help you understand what they cover and how they work.

What is Homeowners Insurance?

Homeowners’ insurance is a vital piece of protection for any property owner. Some people see it as a luxury when in fact, it is a necessity.

A standard homeowners insurance policy will protect your home from damage caused by fire, windstorms, hail, lightning, and certain types of water damage (flooding is not typically covered). 

It will also cover you if someone gets injured on your property and sues you.

Most importantly, it will give you peace of mind knowing that you are protected if something happens to your home. The property damage portion of the policy covers damages to your home and other structures on your property, such as a detached garage or shed.

The policy’s liability portion protects you from lawsuits if someone is injured on your property or if you accidentally injure someone off your property.

Below is the difference between homeowners insurance vs. HOA insurance.

What Homeowners Insurance Covers

Most homeowners insurance policies cover the following:

  • Damage to your home and other structures on your property, such as a detached garage or shed
  • Personal belongings in your home, such as furniture, clothing, and electronics
  • Loss of use of your home if you can’t live there while it’s being repaired
  • Additional living expenses if you have to live elsewhere while your home is being repaired
  • Medical expenses for someone who’s injured on your property
  • Lawsuits if you’re sued for accidental injuries or damage that you cause

What Homeowners Insurance Doesn’t Cover

While homeowners insurance does cover a lot, there are some things it doesn’t. For example, most policies don’t cover damage caused by flooding or earthquakes. 

You’ll need to purchase separate policies for these types of events.

Additionally, homeowners insurance generally doesn’t cover intentional damage, such as vandalism or arson. And, it doesn’t cover damage caused by poor maintenance or wear and tear.

Levels of Coverage For Home Insurance

There are three primary levels of homeowners insurance coverage:

  • Actual Cash Value (ACV) – This is the least amount of coverage you can have, and it covers what your home or how much your belongings are worth after depreciation.
  • Replacement Cost (RC) – This level of coverage pays to repair or replace your home and belongings without depreciation factored in.
  • Extended Replacement Cost (ERC) – This is the highest level of coverage, and it covers the cost to repair or replace your home and belongings, even if the costs exceed your policy limit.

When choosing coverage, it’s crucial to consider the value of your home and belongings and the risks specific to your area. For example, if you live in an area prone to floods or earthquakes, you’ll need to purchase separate policies to cover those events.

Once you’ve chosen the right coverage for your needs, review your policy regularly and update it as needed. This will help ensure that you’re always adequately protected.

What Is HOA Insurance?

A homeowners association (HOA) is typically a local organization that manages a neighborhood using the collective HOA dues of all homeowners in its community. 

Although HOA is technically not an insurer, your home may be covered by an HOA if you do not have insurance to cover an accident or other event that occurs on the common property. 

In many instances, homeowners insurance will cover things including building codes and liability coverages, but not HOA coverage. A property owner can also purchase additional coverage for their homes/condo units from an insurance company that does not have ties to the HOA.

Now, let’s talk about HOA insurance. This insurance, also known as community association liability insurance, is a type of insurance that covers common areas and buildings in a community association. It also protects the HOA board members and officers.

What Does HOA Insurance Cover?

HOA insurance typically covers the following:

  • The common areas of the community, such as the pool, clubhouse, and playground
  • The buildings in the community, such as the homes or condos
  • Liability for injuries that occur in the common areas or buildings
  • Legal fees if the association is sued

What Does HOA Insurance Not Cover?

While HOA insurance does cover a lot, there are some things it doesn’t. For example, most policies don’t cover intentional damage, such as vandalism or arson. Additionally, HOA insurance generally doesn’t cover damage caused by poor maintenance or wear and tear.

That is the primary difference between homeowners insurance vs. HOA insurance.

Do I Need Homeowners Insurance If I Have HOA Insurance?

Now that we’ve gone over what home and HOA insurance cover, you may wonder if you need both. The answer is that it depends.

If your homeowner’s association management has an HOA insurance policy covering the common areas and buildings, you may not need a separate home insurance policy. 

However, the HOA insurance generally doesn’t cover your personal belongings or liability. So, it’s still a good idea to have your own homeowner’s insurance policy in addition to your HOA policy.

Homeowners Insurance: Cost Cutting Tips

Here are a few tips to help you save on homeowners insurance:

  • Raise your deductible: A higher deductible means a lower premium. Just be sure that you can afford the deductible if you have to file a claim.
  • Bundle your policies: You can usually save on your overall insurance costs by bundling your home insurance with your auto insurance.
  • Shop around: Don’t just go with the first home insurance policy you find. Be sure to compare rates and coverage from multiple insurers.
  • Discounts: Many insurers offer discounts for things like installing security systems, being claims-free, or having a new roof.

Conclusion

There are many differences between difference between homeowners insurance vs. HOA insurance. You must understand what each type of insurance covers to decide whether or not you need both. We hope this article has answered all your questions about the difference between homeowners insurance and HOA insurance. 

If you have any further questions, don’t hesitate to contact us!