The insurance process for claims involving homeowners associations is not always straightforward. Learn how to file one with your homeowners' association.

The homeowners' associations in the United States are about 351,000, with an average of 22 new associations forming every day. Florida and California have the combined highest number of HOAs nationwide, at 97,700. Furthermore, Florida has the highest concentration of community associations, with 67.3% of homeowners belonging to an HOA. 

In addition, there are 48,500 HOAs in Florida, with roughly 9.57 million people living in HOA communities. These HOAs are regulated by Florida Statutes (Chapter 718 for condominium associations and Chapter 720 homeowners associations) and their governing documents. These HOAs and condo associations often take out liability insurance policies on behalf of their members if their governing law allows it.  

The insurance process is difficult to navigate, so you need to understand how it works and what goes into filing a claim with your HOA. This article discusses homeowners association insurance coverage and the claims process. If you need help making property damage claims with your HOA, contact an insurance lawyer at VG Law for help. 

What Is the Homeowners Association? 

A homeowners association is a non-profit board of local residents working together to address the issues within their neighborhood. Unlike condo associations which consist specifically of condo owners, HOAs, are building owners. So if you have a home in a particular neighborhood or building unit, that is your ticket to being a member of the association.

In addition, your property ownership rights make you eligible to contest for a representative position on the HOA board or board of managers. Depending on your community and its rules, the HOA can do one or more of the following:

  • Clean the community park, tennis court, or pool if there's one
  • Organize neighborhood watch programs 
  • Approve any major renovations or painting to your house 
  • Stipulate charges for services carried out in the community

Another thing people sometimes fail to realize is that an HOA provides liability protection for accidents that happen in its neighborhood. It means that if someone gets injured in the neighborhood pool or a common area of the building unit, the HOA pays for it. They use the money charged per residential unit or house or gathered from their internal revenue service to pay the medical bills. 

If a shared public property gets damaged, the money covers repair expenses. An excellent example of this is broken water lines or other water damages from floods. This way, building or individual unit owners do not cushion the weight of the damage alone. 

What Is Homeowners Association Insurance?

An HOA insurance is a type of commercial property insurance — unlike personal property — that covers external structural damages to your building or condo and common areas belonging to the community. Before contacting an insurance agent to buy homeowners insurance coverage, you should read the fine print of your HOA regulations to know what's covered.

What most homeowners associations have is known as a master policy. This policy covers the HOA and keeps you from paying liability expenses or repairs to common areas passed to you through special assessments. These policies typically cover:

  • Property Damage: It handles replacement costs for damages to the common areas. So, for example, an HOA can take out flood insurance for situations where a natural disaster like a tsunami causes flooding that affect a public area. 
  • Liability: If a visitor to the condo complex, residential unit, or community suffers an injury, the HOA insurance handles any resulting claim settlement. In addition, the insurance covers legal costs nd any other fee that might arise. 

Who Pays for Homeowners Association Insurance Policy? 

Since the HOA master policy is a form of comprehensive coverage involving many people, the homeowners association members collectively pay for the insurance policy. The HOA board of directors divides the payment among each member. As a result, HOAs keep adequate financial records of each member's contributions. 

Note that the money a person pays varies based on their access to amenities and other features. If a member has several unpaid assessments, the HOA may file a civil suit against them. In addition, the unit owner may face a late payment charge. A claim like this affects your credit score, and a mortgage company may not approve you for a loan to buy a home. 

What About Loss Assessment Coverage? 

Homeowners association insurance does not include loss assessment coverage. However, HOA members can add the loss assessment coverage to their homeowner insurance policy. This type of coverage helps you cover part of the damage or loss on common areas. This way, you avoid covering the entire expenses of your portion by yourself.

What Does a Homeowners Association Insurance Not Cover? 

HOA insurance coverage is not without limits. Although it keeps you from paying for damages and injuries within the common area, that's how far it goes. Any injury or damage that occurs within your property is not covered. So suppose a visitor slip and falls within your compound or inside your house. The HOA insurance will not cover it; you will handle any claim payment yourself. 

Also, if your personal property gets stolen or lost, the HOA will not offer any financial support. The preceding applies even if the loss or theft happened in the common area. Furthermore, the HOA insurance has coverage limits for damage to the common area. If the damage exceeds the coverage limit, the HOA board may ask the homeowners to contribute money to cover the repair costs. 

When Should You File an Insurance Claim With Your Homeowners Association? 

When you move into a community with an HOA, you should request a copy of their master policy. Typically it should contain what you can file an insurance claim for and what you can't. For example, most HOA policies will not cover anything within your walls. So, let's assume the walls of your home suffered damages after a tornado; the HOA insurance may cover the repair after some deductibles. However, any property damaged within the house will not come under the HOA coverage. 

So, having established what the homeowners association insurance covers, when should you file a claim? 

You should file a homeowners association insurance claim when the damage suffered is covered by the master policy. But, again, let's consider the tornado example. If your HOA insurance does not list tornado damage in the policy, you cannot use it.

Note that in damages caused by natural disasters, the damage must affect other buildings in the HOA, not just yours. If only your building were affected, you might have to cover it with your homeowner's insurance coverage. But, again, your insurance company will only pay for damages covered in the policy and nothing more.

Another thing to consider is whether the damage was inside or outside your building. If it is inside your building, the insurance won't cover it. In cases of liability, let's consider the slip and fall example. 

If a person slips and falls inside your home, you may be unable to file an insurance claim what the HOA. But if it's outside or in a common area, the HOA insurance covers it. Summarily, you should only file a claim if the homeowner's insurance covers it. If not, let your insurance carrier handle it. What's important is that you're not paying out-of-pocket.

How To File an Insurance Claim With Your Homeowners Association? 

Knowing when you should file an insurance claim is one thing. Another is knowing how to file a claim with your HOA insurance. Below we list the steps to take. 

Ensure the Insurance Policy Covers the Damages

One typical mistake people make with insurance claims is assuming they are covered for things they are not. This assumption is the beginning of failure. Some common HOA insurance claims filed by members are:

  • Fire and smoke damage
  • Damaged sprinklers
  • Water damages 
  • Storm and hurricane damages 
  • Broken water lines 
  • Roof damage

However, most HOA policies do not cover natural disasters. Those with this coverage will likely have large deductibles. So ensure you read through the master policy for clarity. In addition, you should give a copy of the master policy to your attorney to review and explain any gray area to you.

Go Over the HOA Bylaws and Policy Surrounding Community Members 

Yes, you know the HOA bylaws by heart. Chances are you were part of those who drafted it, especially if you're a board member. But the rules of due diligence states that you should still check the bylaws to ensure you don't mistake who is liable for damages. This way, you can save your time and the board's by not filing a claim they are not responsible for. 

In addition, the bylaw clearly states the common areas and other shared elements. So suppose your claim did not result from an injury or damage in the common area. Then, it's best to hold off the claim. But, again, you should have your homeowner's insurance lawyer look at the bylaws and advise you on the legitimacy of your claim.

Go Over Reasons Why the Insurance Company May Reject Your Claim

Indeed, unit owners file an insurance claim with their HOA, but it doesn't end there. The homeowners association must have purchased the master policy from an insurance company. So, when you bring a claim before the board, they will, in turn, forward it to their insurance carrier. 

The insurance carrier may disapprove of the claim and fail to approve the settlement amount. One common reason this may happen is that the board manager failed to notify them on time or there is not enough documentation of the damages. So, make a mental note of possible reasons for denial, and cover any loophole. 

Put Together Enough Evidence 

Before your claim can get to your HOA's insurance carrier, it must first be approved by the HOA. As such, you need to convince them that you deserve the compensation you're seeking. One essential thing you need to prove your claim is evidence. You need to show the cause of the damage and that it meets the insurance requirements. 

Note that if you intentionally caused damage to your structure, the homeowners' insurance will not cover it. Thus, expect the board to investigate your claim before approving it and forwarding it to their insurance company. Then expect the insurance adjuster to conduct another investigation before you get paid. 

File the Claim

After doing the above, the last step to take is filing the claim, and you must do it within the stipulated period. Unfortunately, the Florida homeowners association does not have a uniform period for members to file a claim. So, it would help if you apprised yourself of the time limit in your bylaws. 

Also, keep in mind that the HOA's insurance carrier has a time frame for the HOA board manager to file the claim. Therefore, a delay in filing your insurance claim with the HOA will affect the board manager's time to file with the insurer. Bringing a claim out of time is a legal ground for denying a claim, whether with the HOA or their insurance provider.

Now, you may follow all these steps and still find yourself with a refusal. When this happens, you need to determine the reason. If you find it was in bad faith and your appeal to the HOA board falls through, you can take legal action. But first, speak with a bad faith insurance lawyer as soon as possible. 

Book a Free Consultation With VG Law Today!

Even if you believe you have a valid claim, the HOA board or the insurance company may deny you compensation. If you think either of them acted in bad faith, contact our homeowners' insurance lawyers immediately. At VG Law, we are committed to helping Florida homeowners protect their rights. 

In addition, we have extensive experience dealing with insurance claims and can determine your claim's validity or the lack of it. Contact us today to begin the process. We offer free initial consultations. 

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