Understanding Your Hazard Insurance

Do you know that your homeowners’ association Master Policy may not provide enough coverage for your dwelling?

Many property owners enjoy the benefits of planned community living within a homeowners’ association, but few homeowners understand the complexities of adequately insuring their property against fire, earthquake, flood, or other hazards. A common misconception is that the coverage provided by the association is greater or more comprehensive than it actually is.

The Covenants, Conditions, and Restrictions (CC&R’s) and Bylaws of the association govern what is covered under its Master Policy, and these protections vary widely. Understanding the specific coverage offered by your association is the first step to protecting yourself and your valuable investment from the risks associated with being underinsured.

Did you know that many associations carry a Master Policy which assumes responsibility for damage to the basic dwelling structure only? These policies provide no coverage for appliances, carpeting, cabinets, wall coverings and other items within the home, sometimes not even for the interior walls. In this case, the owner may consider purchasing a unit owners policy through their personal insurance agent to cover the contents of the home and to insure against fire, theft, and water damage to the interior of the structure.

Discuss your needs with your insurance agent – someone you most likely already trust for your car, life and health insurance needs. You might want to talk to your agent about special coverage for custom upgrades, wood flooring, window coverings, built-in cabinets, walls, and ceilings. You may choose to purchase Loss Assessment insurance which covers your share of assessments which might be charged against you by the association for property or liability losses. This can be important if the association suffers a large loss which affects the entire community. You might also consider additional earthquake coverage.

A unit owners policy can provide important additional coverage for the contents of your home. Your insurance agent is a good resource to call upon when making decisions about the type of coverage best suited for you. Your association or its management company may also be a helpful resource. The best protection against financial loss is well-planned coverage of your home and your possessions.