Does an HOA Have to Insure Their Common Areas?

Imagine waking up to find a fallen tree blocking the entrance to your neighborhood clubhouse or a burst pipe flooding the community gym. Who’s responsible for fixing the damage? More importantly, is there insurance in place to cover it?

Homeowners associations (HOAs) play a crucial role in maintaining shared spaces like parks, pools, and clubhouses. But when it comes to protecting these areas, insurance can be a murky subject. Does an HOA have to insure their common areas?

The short answer: Yes, in most cases — but there are exceptions.

This is more than just a legal formality. For both homeowners and HOA boards, having the right insurance is key to avoiding unexpected costs, protecting property values, and ensuring peace of mind.

In this article, we’ll break down what every HOA needs to know about common area insurance, when coverage is required, and what it means for you as a homeowner. 

What Are “Common Areas” in an HOA?

 

Simply put, common areas are the shared spaces in the neighborhood that the HOA owns or maintains for the benefit of all residents. These areas help keep the community functional, attractive, and enjoyable, but they also come with responsibilities, including upkeep, repairs, and insurance coverage.

So, what counts as a common area? Here are some key examples:

• Pools – Whether it’s a full-size swimming pool or a small wading area, if it’s shared by the community, the HOA is in charge of its maintenance, cleaning, and safety standards.
• Clubhouses – These spaces are often used for HOA meetings, social events, and even private gatherings (sometimes available for rent by residents). The HOA typically manages the upkeep, utilities, and any necessary repairs.
• Parks & Green Spaces – That beautifully landscaped area with benches, trees, or even a playground? It’s likely a common area that the HOA is responsible for maintaining.
• Sidewalks & Pathways – Essential for walking, jogging, or just getting from place to place, these shared pathways fall under the HOA’s maintenance duties.
• Entry Gates & Security Features – If your community has gated access or security cameras in shared spaces, the HOA oversees their upkeep and operation.
• Elevators & Parking Lots – In condos and multi-unit buildings, shared features like elevators, lobbies, and parking lots are considered common areas that require HOA management.

Common Areas vs. Limited Common Elements

Now, here’s where it can get a bit confusing — some features in an HOA community fall into a gray area known as limited common elements. These are spaces that are technically shared but are designated for the use of specific homeowners rather than the entire community.

Examples of limited common elements include:

• Balconies & Patios – While they may be attached to individual units, they’re often maintained by the HOA.
• Shared Walls & Roofs – In townhomes and condos, these structural elements are commonly owned but directly impact specific units.
• Assigned Parking Spaces – While the HOA might oversee the lot, individual spaces could be assigned to certain homeowners.

Why does this distinction matter? Because when it comes to insurance and maintenance, who is responsible depends on whether the area is truly “common” or limited to a few residents. 

The HOA typically insures and maintains common areas, but limited common elements may require a mix of HOA and homeowner responsibility.

What Is HOA Insurance?

Your HOA is the caretaker of your community’s shared spaces — parks, pools, clubhouses, and even sidewalks. Just like homeowners buy insurance to protect their homes, an HOA needs coverage to safeguard its common areas and financial stability.

So, what exactly does HOA insurance mean?

• Also known as the HOA master policy, it protects the HOA’s shared property and financial interests. If a fire damages the clubhouse, a storm destroys the community sign, or vandals target a neighborhood playground, HOA insurance helps cover the cost of repairs or rebuilding.
• It’s different from homeowner’s insurance. While a homeowner’s policy covers their personal dwelling, belongings, and liability inside their unit, an HOA master policy focuses on the shared spaces that everyone in the community benefits from. In other words, your homeowner’s insurance won’t fix a broken elevator or repair a community pool—your HOA’s policy will.
• For condo associations, HOA insurance can be even more complex. Depending on the type of master policy in place, coverage may extend to the physical structure of condo buildings, meaning owners may only need insurance for the interior of their units. However, in some cases, condo owners may be responsible for more than they think, making it crucial to understand where HOA coverage ends and personal coverage begins.

What Does HOA Insurance Cover?

• Property Damage – Covers repairs or rebuilding of shared structures damaged by fire, storms, or vandalism.
• Liability Protection – If someone slips on a wet pool deck or gets injured at the community park, the HOA won’t have to pay out-of-pocket.
• Directors & Officers (D&O) Insurance – Protects board members from personal lawsuits related to their HOA duties.
• Fidelity Bonding – Safeguards HOA funds in case of fraud or theft by board members or employees.
• Specialized Coverage – Depending on the location, an HOA might need extra protection for floods, earthquakes, or hurricanes.

Why HOAs Typically Need Insurance

Imagine walking through your community after a severe storm, only to find a tree has fallen on the clubhouse roof, the pool area is flooded, and debris is scattered everywhere. Or worse, a visitor slips on a wet sidewalk and decides to sue the HOA for their injuries.

Who covers these costs? Without insurance, the answer is simple: the homeowners. That’s why insurance isn’t just a formality for an HOA — it’s a crucial safeguard that protects both the community and its residents from unexpected financial burdens.

Here’s why most HOAs need insurance:

Legal Obligations

Many state laws and HOA governing documents require the association to carry insurance. Depending on the state and the HOA’s bylaws, this can include property insurance for common areas, liability insurance, and even coverage for board members.

Skipping insurance isn’t just risky — it could put the HOA in legal trouble, leading to fines or potential lawsuits from homeowners who expect their community to be properly managed.

Financial Protection

Even the best-maintained communities face unexpected disasters. Fires, storms, vandalism, and accidents can result in costly damages. HOA insurance helps cover repairs, legal fees, and liability claims, ensuring that a single incident doesn’t wipe out the association’s budget.

Without it, the HOA may be forced to dip into reserve funds or, worse, demand higher fees from homeowners to cover the costs.

Homeowner Protection

When an HOA lacks proper insurance, it’s the homeowners who suffer. If major damage occurs or the HOA is hit with a lawsuit, homeowners may be forced to pay higher dues or special assessments to cover the expenses.

This can create financial strain and frustration for residents who expect their association to handle these risks responsibly.

Simply put, HOA insurance isn’t just about protecting buildings, pools, or clubhouses — it’s about safeguarding the financial well-being of every homeowner in the community.

Having the right coverage in place ensures that when the unexpected happens, the HOA has the resources to respond without placing the burden directly on residents.

What Kind of Insurance Does an HOA Need?

Running a homeowners association (HOA) comes with a lot of responsibilities, and one of the biggest is making sure the community is properly insured. So, what kind of insurance does an HOA need? It depends on the common areas, the location, and even the specific risks the community faces.

Here are the key policies every HOA should consider:

Property Insurance

Imagine a fire breaks out in the community clubhouse, a tree falls on the pool house during a storm, or vandals damage the entrance gate. Property insurance is what covers these physical structures in common areas.

It helps pay for repairs or replacement, ensuring that the HOA doesn’t have to dip into reserves or pass sudden costs onto homeowners.

General Liability Insurance

What if a resident is walking through the community park, slips on a wet sidewalk, and breaks their ankle? Or maybe a guest trips over uneven pavement in the parking lot and sues the HOA for medical costs.

That’s where general liability insurance comes in. It covers injuries, accidents, and legal claims that happen in common areas, protecting the HOA from costly lawsuits.

Directors & Officers (D&O) Insurance

Serving on an HOA board isn’t just about making decisions; it also comes with legal risks. Board members are responsible for managing the community, handling finances, and enforcing rules, but sometimes their decisions don’t sit well with homeowners.

If a resident sues the board for mismanagement, discrimination, or even just an unpopular rule change, D&O insurance helps cover legal fees and protects board members from being personally liable.

Flood, Earthquake, and Other Specialty Coverage

Not all disasters are covered by a standard insurance policy. If an HOA is in a flood zone, near an earthquake fault line, or in a region prone to wildfires, additional coverage may be required — or strongly recommended.

Many standard property insurance policies exclude these types of natural disasters, which means that without specialty coverage, an HOA could be left footing the bill for costly damages.

Umbrella Policies

Sometimes, a single lawsuit or claim can exceed the limits of an HOA’s standard insurance. That’s where an umbrella policy steps in. It provides extra coverage beyond basic policies, acting as a financial safety net in case of major claims. 

Who Pays for HOA Insurance?

You might assume that your HOA takes care of insurance costs on its own, but in reality, the homeowners are the ones footing the bill. The HOA is responsible for securing coverage, but the money to pay for those policies has to come from somewhere — and that somewhere is you and your neighbors.

Here’s how it typically works:

Funding Through Homeowner Dues

Every homeowner in the community pays regular dues, a portion of which is set aside for insurance premiums. This ensures that common areas like the clubhouse, sidewalks, pools, and playgrounds are covered.

Think of it as a shared responsibility; instead of one person taking on the full burden, everyone contributes to keep the community protected.

Special Assessments When Standard Dues Aren’t Enough

Ideally, the HOA collects enough from dues to cover all its expenses, but sometimes, unexpected claims or disasters push costs beyond what’s budgeted. In those cases, the HOA may issue a special assessment, meaning each homeowner is required to pay an additional fee to help cover the shortfall.

This can happen if there’s a major lawsuit, storm damage, or other unforeseen insurance claim that the HOA’s reserves simply can’t handle.

Rising Insurance Costs = Higher Dues or Cutbacks

Insurance premiums are constantly changing, and in recent years, they’ve been on the rise. When that happens, HOAs face tough decisions: either raise dues to cover the increased costs or cut back on other expenses, like landscaping, maintenance, or even community events.

Some HOAs may try to shop around for better rates, but in high-risk areas (like those prone to wildfires, hurricanes, or flooding), that’s not always an option.

So, if you live in an HOA, it’s always a good idea to stay informed about how your association manages its insurance costs and whether any changes might be coming your way.

What Happens If an HOA Doesn’t Have Insurance?

Skipping insurance might seem like a way for an HOA to cut costs, but in reality, it’s like walking a financial tightrope without a safety net. A single unexpected event — whether it’s a fire, flood, or lawsuit — can send the entire community into turmoil.

Here’s what awaits when an HOA doesn’t have proper insurance coverage:

Legal Risks

Many states have laws requiring HOAs to carry insurance for common areas, and ignoring these rules can put the association in serious legal trouble. If an HOA’s governing documents also mandate coverage, failing to have a policy could mean the board is violating its own bylaws, opening the door to lawsuits from homeowners.

In some cases, board members themselves could be held personally liable for negligence.

Financial Risks

Think about all the things insurance usually covers: repairs from storm damage, liability claims if someone gets injured in a shared space, or even legal fees if the HOA is sued. Without coverage, the association is on the hook for all these expenses.

That means costly repairs have to be paid out of HOA reserves (if there are any) or through massive special assessments on homeowners. And if the financial strain becomes too much, bankruptcy isn’t off the table.

Homeowner Impact

No insurance doesn’t just hurt the HOA; it affects every homeowner in the community. Lenders often require proof of insurance before approving mortgages, so a lack of coverage could make it harder for residents to sell or refinance their homes.

Property values may drop, and in extreme cases, homeowners might even be personally liable for damages if the HOA can’t cover costs.

At the end of the day, skipping insurance isn’t just a bad decision; it’s a dangerous one. It puts the community at risk legally, financially, and personally, and recovering from a disaster without proper coverage could take years.

The cost of insurance is a small price to pay compared to the devastating consequences of going without it.

Can an HOA Choose Not to Insure Certain Common Areas?

In some cases, an HOA can choose not to insure certain common areas—but that decision comes with risks. Some communities, especially smaller ones, may see insurance as an unnecessary expense.

But skipping insurance isn’t just about saving money — it’s about whether the HOA (and its homeowners) are willing to take on the financial and legal risks if something unexpected happens.

When Might It Be Optional?

• Small HOAs: If the community consists of just a handful of homes with minimal shared spaces, insurance might seem like an unnecessary expense. A four-home development with a single shared driveway, for instance, may not see the need for extensive coverage.
• Private Communities: Some exclusive or gated communities with restricted public access may feel that their risk is lower. If outsiders aren’t using the facilities, the HOA might believe that skipping insurance is a safe bet.
• Low-Risk Properties: If the HOA doesn’t have a pool, clubhouse, playground, or other high-liability common areas, they might think their exposure is minimal. A neighborhood with only walking paths or open green spaces might believe it’s safe to go without insurance.

But just because an HOA can opt out of insuring certain common areas doesn’t mean it should.

The Risks of Opting Out

While avoiding insurance might seem like a cost-cutting measure, it often shifts financial and legal risks onto homeowners in ways they may not expect. Here’s what can go wrong:

• Individual Homeowner Liability: If someone gets hurt in an uninsured common area, the HOA may not be the only party responsible — homeowners themselves could face personal financial liability. If the HOA is sued and doesn’t have coverage, it may turn to special assessments to cover legal fees and settlements, which means homeowners could be forced to pay thousands of dollars out of pocket.
• Legal Disputes: When an HOA doesn’t carry insurance for common areas, disagreements among homeowners can become a nightmare. If a major repair is needed and the HOA can’t afford it, who pays? Without a clear policy in place, legal battles can erupt over how to handle the costs.
• Unexpected Costs: Natural disasters, vandalism, or simple wear and tear can lead to expensive repairs. If an HOA hasn’t insured a clubhouse, for example, and a fire breaks out, the cost to rebuild would fall entirely on the homeowners. What seemed like a money-saving move can turn into a financial crisis overnight.

How Homeowners Can Check If Their HOA Has Proper Insurance

When you live in an HOA community, you trust that your monthly dues are being used wisely — covering everything from landscaping to maintaining shared amenities like pools, clubhouses, and sidewalks.

But what if your HOA isn’t properly insured? A single lawsuit, fire, or natural disaster could leave homeowners footing a massive bill.

So how can you make sure your HOA has the right coverage in place? Here are some key steps to take:

1. Review HOA Documents (CC&Rs, Bylaws, and Insurance Policies)

The first step is to dig into the HOA’s governing documents. These typically include:

• CC&Rs (Covenants, Conditions & Restrictions) – These documents outline the rules of your HOA, including financial responsibilities and insurance requirements.
• Bylaws – The bylaws explain how the HOA operates and may include information on how insurance decisions are made.
• Master Insurance Policy – This is the most important document when it comes to coverage. It should specify what the HOA is responsible for insuring (such as common areas) and what falls under homeowners’ individual policies.

If you don’t have access to these documents, you can request them from your HOA board or property management company. Reviewing them will give you a clearer picture of what should be covered versus what might be missing.

2. Ask for Proof of Coverage

Even if the governing documents mention insurance, that doesn’t necessarily mean the HOA is actively maintaining proper coverage. Policies can lapse, or they may not provide adequate protection. Homeowners have the right to ask for proof of coverage, which should include:

• A copy of the HOA’s current insurance policy
• The coverage limits and exclusions
• The policy’s expiration date

If the board hesitates to provide this information, consider it a red flag. Transparency is key when it comes to protecting the community’s financial well-being.

3. Attend Board Meetings and Ask Questions

HOA board meetings are an excellent place to get clarity on insurance matters. If you’re unsure about the coverage or if other homeowners share your concerns, bring it up during an open forum. Some key questions to ask include:

• Does the HOA’s policy cover all common areas?
• Are there any gaps in coverage that could leave homeowners exposed to liability?
• Has the board recently reviewed or updated the insurance policy to ensure it meets current needs?
• Does the policy include protection against lawsuits?

If the board seems dismissive or doesn’t have clear answers, that could indicate a problem. Homeowners should push for proper due diligence when it comes to insurance.

What to Do If the HOA Is Underinsured or Refuses to Insure Common Areas

If you discover that your HOA doesn’t have sufficient insurance or, worse, no insurance at all — it’s time to take action. Here’s what you can do:

• Gather other concerned homeowners. You’ll have more influence as a group.
• Request a formal review of the HOA’s insurance policy. This can be done through a board meeting or by submitting a written request.
• Consult a legal expert. If the board is refusing to address the issue, a lawyer specializing in HOA law can provide guidance.
• Consider running for the board. If the current leadership isn’t making smart financial decisions, new leadership may be needed to protect the community.

Can Homeowners Be Held Personally Liable If the HOA Lacks Insurance?

Most homeowners assume that if something goes wrong in a common area — like a slip-and-fall accident or property damage — the HOA’s insurance will cover it. But what if the HOA doesn’t have insurance or has inadequate coverage?

Unfortunately, that risk could fall directly on homeowners, leading to financial headaches, special assessments, and even personal liability. Here’s how it can happen and what you can do to protect yourself.

When Homeowners Might Be on the Hook

If your HOA gets sued and doesn’t have insurance — or doesn’t have enough coverage — the cost doesn’t just disappear. It often gets passed down to homeowners. This can happen in a few ways:

• Special assessments – Without insurance to cover legal fees or damages, the HOA may require homeowners to pitch in through a special assessment. Depending on the lawsuit, these assessments could be thousands of dollars per homeowner.
• Personal liability risks – In rare but serious cases, if an HOA is found to be negligent and unable to pay a settlement, individual homeowners could face personal financial responsibility. This is especially risky in HOAs with poorly maintained finances or no clear legal protections for members.

Lawsuits and Negligence: Why This Matters

If someone slips on a broken sidewalk in a common area and the HOA can’t cover the damages, homeowners could be forced to step in financially. Negligence can make things even worse.

If a court finds that the HOA ignored maintenance issues or failed to address known hazards, the liability could be even greater. Without proper insurance, those costs may fall on the community’s homeowners, even if they had nothing to do with the issue.

How to Protect Yourself

The last thing any homeowner wants is a surprise financial burden from their HOA. Here’s how you can safeguard yourself from these risks:

• Review the HOA’s governing documents – These documents should outline what insurance coverage the HOA is required to maintain.
• Attend HOA meetings – Stay informed about the community’s financial health and whether insurance policies are up to date.
• Consider personal umbrella insurance – Even if your HOA has insurance, gaps can exist. A personal umbrella policy provides an extra layer of liability protection in case you ever get caught in an unfortunate situation.

Frequently Asked Questions (FAQs)

1. How can homeowners encourage the HOA to improve or update its insurance?
   Homeowners can start by reviewing the current policy, identifying gaps in coverage, and gathering support from other residents. Attending HOA meetings, voicing concerns, and proposing a vote on improved coverage can help. Consulting with an insurance expert to present updated options may also be effective.
2. Is an HOA legally required to carry insurance for common areas?
   The legal requirement for HOA insurance depends on state laws and the association’s governing documents (CC&Rs). Many states mandate that HOAs carry property and liability insurance for common areas, while others leave it up to the HOA’s discretion.
3. Can homeowners sue an HOA for not having proper insurance?
   Yes, homeowners may have legal grounds to sue if the HOA fails to maintain adequate insurance, especially if it leads to financial loss, personal injury, or property damage. The governing documents typically outline the HOA’s insurance responsibilities, and failure to comply could result in legal action.
4. Are HOA board members personally liable if they fail to insure common areas?
   In some cases, yes. If board members fail to maintain required insurance, they could be held personally liable for negligence, especially if their actions result in financial losses for the HOA. Directors and Officers (D&O) insurance helps protect board members from personal liability.

Final Thoughts: Does an HOA Have to Insure Their Common Areas?

At the end of the day, yes, most HOAs do need insurance for their common areas, and skipping it is a gamble no community should take. As a homeowner, staying informed and making sure your HOA has the right coverage is key to protecting your investment.

If you’re ever in doubt, don’t hesitate to seek legal advice or get a second opinion from an expert.

Want to make sure your HOA is doing things by the book? Become a member today and get personalized support from an HOA attorney, plus access to exclusive resources to help you navigate HOA living with confidence!