Homeowners Can Use Their HOA’s Insurance

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By: Bill Henry
PublishedApr 15, 2022
4 minute read

If you live in a community regulated by a Homeowner’s Association, then you’re familiar with that extra payment you make each month in addition to your mortgage: your HOA dues. That payment provides for the maintenance and operation of your HOA-governed community or condo unit and its amenities. Your dues also maintain your HOA’s state-mandated insurance policy. And guess what? Dues-paying homeowners can use their HOA’s insurance in addition to their own policy.

This article explains when and how homeowners can use their HOA’s insurance in the event extra coverage is needed.

Find Out if Our HOA Attorneys Can Help You

As an HOA member, your association dues go toward the master insurance policy premium. You have a right to file a claim through your HOA master policy first if there’s a chance the damage to your home resulted from issues originating on HOA common property. If you’re having issues with an HOA master policy claim, call 303-688-0944 to begin a case assessment.

Homeowners Can Use Their HOA’s Insurance

Colorado requires that every HOA maintain a master insurance policy as coverage against property damage and legal issues. This policy works in tandem with each member’s homeowner insurance. Think of it not as an extra layer of coverage, but as a wider net. The Colorado Common Interest Ownership Act states that:

“The unit owners shall be included as additional insureds but only for claims and liabilities arising in connection with the ownership, existence, use, or management of the common elements and, in cooperatives, also of all units. The insurance shall cover claims of one or more insured parties against other insured parties.” CCOI, 33.3, Section B

Essentially, the HOA policy takes in all the “common elements” that would not be covered in your individual home or condo unit insurance.

Common elements typically include:
  • parking lots
  • sidewalks
  • elevators
  • parks
  • clubhouses
  • swimming pools
  • fitness centers

Depending on the townhouse or condominium HOA, common areas can include:

  • patios or balconies
  • roofs
  • facades

When common areas take damage from a storm, fire, or accident, the master policy kicks in so repairs and improvements can happen swiftly. That’s one tangible benefit.

When Homeowners Can Use Their HOA’s Insurance

The HOA master policy also covers members in the event of lawsuits or medical expenses filed by someone who is injured on common HOA property. Let’s take a look at an example: a kid’s pool party.

Let’s say you hold a pool party for your child’s birthday. The swimming pool is adjacent to the fitness center in a common area. One of the children attending the pool party slips and falls on the wet cement and breaks an elbow. Hoping to recoup hospital expenses, the child’s parents try to hold you liable. Because the accident occurred in a common HOA area, the injured child’s parents should instead take up the matter with the HOA’s insurance company.

When Homeowners Cannot Use Their HOA’s Insurance

As we mentioned, a master policy acts as a wider net of protection, not an extra layer. An HOA member cannot use their HOA’s master policy to pursue a claim against another person.

You also cannot use it to collect extra reimbursement on top of legitimate claims your insurance has already paid. For instance, if your house takes damage from a blaze that originated at your house, you cannot file an extra claim with your HOA just because you’re a member.

Homeowner Insurance versus HOA Master Policies

Sometimes an individual’s insurance claim can overlap with the HOA’s master policy or fall into a gray area where it’s unclear which provider should take the claim. This is a common dispute in HOA’s, especially for people who live in condos and townhomes where the association insures and controls the building’s exterior and the members purchase coverage for the interior.

For example, let’s consider a condo building that has a water leak that affects several units. It may not be apparent right away who should file a claim. An investigation will likely be needed to determine the source of the leak and reveal which policy should be used.

Another scenario is a single-family home sustains damage after a tree in a common area falls on their home. Obviously, the homeowner would rather pursue a claim through the HOA’s master policy to dodge a higher premium. The HOA board, in a similar position as the homeowner, will not file a claim unless it must.

Get Started on Your HOA Claim Right Away

Do not delay if you plan to try to file a claim through your HOA’s master policy. If you or the HOA board remain in a stalemate or wait too long to start a claim, it could get denied altogether.

Who Files the HOA Insurance Claim?

The proper course is for the board manager to file a written claim with the HOA’s insurance company and let them sort it out.

What Happens if the HOA Board Does Not File the Claim?

If your HOA board is dragging its feet on a claim, or refuses to file altogether, the worst thing you can do is let the issue hang unresolved until it’s too late to do anything but assign blame. Get clarity. Ask your HOA board manager to put his refusal, and reason for refusal, in a written letter. Then submit that letter to your personal homeowner’s insurance company.

By showing you made an honest but unsuccessful effort to get a claim filed through your HOA, you put the ball in your insurance company’s hands. They can probably nudge your HOA in the right direction. Or they’ll pay your claim for you, then seek reimbursement from the HOA’s insurance firm.

A Quick Look at Insurance Claim Denials

You pay an insurance company to look out for you. But understand, insurance companies are in business to look out for themselves, too, so there are bound to be some conflicts. Therefore, you also need to protect yourself.

Examples of blatant bad faith insurance practices:
  • Unjustified denial of a valid claim
  • Unreasonable delay of action on a claim

In most situations, it does an insurance company no good to delay, deny, or engage in monkey business on legitimate claims. Unfortunately, what looks cut and dried to an average policyholder can get maneuvered into an agonizing stalemate by a cunning adjuster.

Some insurers operate in more subtle ways to make the process appear more troublesome than it’s worth.

Examples of subtle bad faith insurance practices:
  • Failing to communicate important information about your claim
  • Ignoring your inquiries on the status of your claim
  • Bogging down the process with irrelevant or tedious documentation demands
  • Failing to properly investigate the merits of your claim
  • Conducting a dishonest, immoral, or illegal investigation of your claim
  • Offering a much lower settlement than the claim merits
  • Using sudden policy changes or obscure laws to deny a claim

This is a general overview of what constitutes bad faith practice in the insurance industry. For a more comprehensive guide on how to fight a homeowner’s insurance claim denial, click here.

Get Help with a Denied HOA Insurance Claim

If you find yourself at an impasse with your HOA, it’s smart to go over your particular HOA’s insurance language with an attorney. Give us a call at 303-688-0944 to begin a case assessment. We may be able to help you negotiate a path back to peace of mind.

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