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Homeowner’s Association Insurance

Insurance Checklist from Hill Insurance

Getting Started

What the Assocaition’s Master Policy Insures vs. What the Homeowner Should Insure

The existence of a homeowners association insurance policy does not mean that the individual unit owners do not need their own insurance policies. Each unit owner should purchase their own insurance policy to protect themselves and their personal belongings and the policy should include dwelling coverage at least up to the amount of the association’s deductible.

  • In July of 2011, Utah HOA Law was amended with the following association’s insurance requirements that an association that contains attached dwellings, shall maintain property insurance in the amout equalt to 100% of full replacement cost on all permanently attached physical structures and general liability insurance on all common areas.

Some exceptions do apply, and you can read the respective bills in their enitety to find out what those are:

Utah Community Association Act: https://le.utah.gov/xcode/Title57/Chapter8A
Utah Condominium Ownership Act: https://le.utah.gov/xcode/Title57/Chapter8

Association’s Master Policy

What does this cover?

  • If you own a townhome or condominium that is physically attached to another unit and belong to a homeowner’s associations then the association’s insurance policy will be responsible to cover you unit, common & limited common areas, and facilities.
  •  This does not include unit owner contents.

Property

  • The property insurance covers the unit and includes coverage for any fixture, improvement or betterment installed by a unit owner including:
    o Floor Covering
    o Cabinet
    o Light Fixture
    o Electrical Fixture
    o Heating or Plumbing Fixture
    o Paint
    o Wall Covering
    o Window
    o Any other item permanently part of or affixed to a unit

Liability

  • The liability insurance covers the common areas and facilities and must include:
    o All occurrences commonly insured against for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common areas and facilities.
    o Medical Payments

HO-6 Insurance Policy

A property or liability insurance policy issued to the associations of unit owners can not prevent a unit owner from obtaining insurance for the unit owner’s own benefit

The existence of a homeowner’s associations insurance policy does not mean that the individual unit owner does not need their own insurance policies. Each unit owner should purchase their own insurance policy to protect themselves and their personal belongings and the policy should include the dwelling coverage at least up to the amount of the association’s deductible.

It is important that you discuss insurance options with a licensed personal lines agent who can tailor a policy to fit your individual needs.

Included coverage items in a HO-6 Condo Insurance Policy: Dwelling, Other Structures, Personal Property, Loss of Use, Personal Liability, Medical Payments and Loss Assessments.

HO-6 Coverage Items

Dwelling: Coverage for the dwelling/unit

  • Utah law makes the association responsible for insuring the building and all the attached fixtures, but it also make the unit owner responsible for their portion of the loss attributable to the association’s policy deductible.
  • The dwelling coverage limit of a HO-6 policy can be applied to your portion of the association’s deductible and you will only be out of pocket the deductible amount chosen for the HO-6
  • Dwelling Coverage.
    o Example: A fire starts in the attic of your unit and causes a total of $75,000 in damages. Both your unit and the neighbor’s unit were damaged. The association is responsible to insure the building but has a $20,000 deductible. You and your neighbor are now responsible for your portion of the $20,000 deductible (according to the amount of damage each unit sustained). Luckily for you, your personal lines agent sold you a HO-6 policy with enough dwelling coverage to cover your portion of the deductible.

Other Structures: Coverage for other structures on the premises such as tool sheds or detached garages.

Personal Property: Provides coverage for all your personal belongings (everything you would take when you move). When choosing the limit, always err on the high side.

  • Insurance agents will highly recommend that you take inventory of higher value items, write down identification numbers on electronics and take pictures of art, jewelry, etc.

Loss of Use: Coverage for the living expenses that results from a covered loss that makes the unit uninhabitable.

  • Personal Liability: Coverage for lawsuits, legal expenses, and medical costs if you are legally responsible for injury or property damage to others.
    A personal liability policy can protect you in the event of injury or property damage.
    o For your dog to be covered by your home insurance, you will need to add your dog to your policy. Some insurance companies have “breed list” which determines which breeds they will or will not cover, and which breeds are associated with higher premiums.

Medical Payments: Coverage for a person injured in your condo that is not a named insured on the policy.

  • Covering minor medical treatment.
  • This limit is generally low but provides a means to cover minor medical treatments without filing a claim on the personal liability protion of the HO-6 Condo Insurance Policy.

Loss Assessments: Coverage for charges levied by the association not all members for a covered cause of loss.

  • Example: A visitor is injured in the pool and sues the association. The injured person is awarded $1.1 million in the settlement. The association purchased a $1 million liability policy which means $100 thousand of the claim is not covered by insurance. Therefore, the members of the association are assessed the difference.

Additional Coverages to Consider

HO-6 policies cover a good start to providing coverage to you and your things but there are other additional coverages to consider purchasing to further protect yourself and your personal belongings.

  • Coverage for your autos and recreational vehicles
  • Loss of use and additional living expenses due to a claim
  • Supplemental earthquake insurance
  • Flood or surface water insurance for your unit and your contents
  • Pollution Coverage which may include Mold, Lead, Asbestos and other common pollutants
  • Other coverage: fine arts, jewelry, collectibles, other valuables articles, money, sports equipment, etc.
  • Loss of rent – if your unit is a rental
  • Sewer Backup and/or other specialized coverage

Unit Owner Checklist

Always consult with your personal insurance agent to determine what insurance coverage you will need.

  • Purchase an individual unit owner insurance policy, also known as a HO-6 Insurance Policy.
    o This should include the dwelling coverage, commonly known as “Coverage A”, of no less than the association’s deductible.
  • Loss Assessment Coverage
    o This coverage protects you against losses to common areas assessed to you by your HOA
    o The amount of coverage you need depends on your HOA’s bylaws – some HOA’s assess damages more frequently than others.
  • Coverage for Personal Content
  • Personal Liability Protections
  • Sewer Backup
  • Other Specialized Coverages
    o These are items to discuss with your insurance agent because everyone’s coverage needs are different.

Other Insurance Coverage Options

  • Loss of use and additional living expenses due to a claim
  • Loss assessment coverage
  • Loss of rent – if your unit is a rental
  • Flood insurance for your unit and personal content
  • Earthquake insurance
  • Scheduled coverage for your personal items
    o Fine arts, jewlery, collectibales, antiques, other valuable articles, sprots equipement, etc.
  • Coverage for your autos and recreational vehicles
  • Coverage for you pets

For Indivdual Insurance Quotes Contact Hill Insurance
Phone: (801) 226-0606
Email: info@myhillinsurance.com
Website: www.myhillinsurance.com

For complete details of insurance coverage & exclusions please refer to the master policy, your CC&Rs and current Utah law. This summary does not imply, afford, or guarantee coverage or any limits other than what is provided by the actual insurance policy. This document is not intended to provide any professional or legal advice. We reserve the right to correct typographical errors.

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