February 20th, 2014
Do you live in a neighborhood with a homeowners association? Are you paying regular dues to be a part of your community standards? If yes, then you may be eligible for insurance discounts or able to upgrade your homeowners insurance policy.
What is a homeowners association
A homeowners association, or HOA, is a community entity that enforces community standards and laws. According to the Community Associations Institute, more than 63 million Americans were a part of an association-governed community in 2012. These associations exist in order to maintain the common areas of a neighborhood and can create certain restrictions on those who reside in the area. Some of these standards might include what colors a homeowner can paint their house, a landscaping requirement that would not allow for a yard to get unruly.
It is usually required that all residents within the homeowners association jurisdiction become members and pay a fee. Some HOAs will even issue their own newsletter updating residents on what is happening in the community. An HOA is able to create its own bylaws and may hire an outside property management company in order to enforce maintenance and design standards.
You probably already know that it's important and smart to have homeowners insurance in order to protect your most valuable asset and belongings. In addition to providing financial security and peace of mind in case your home is struck by lightning or robbed, liability coverage through homeowners insurance will protect you if someone gets hurt on your property. While everyone should have a homeowners insurance policy, some might choose to forgo buying coverage because of the cost. Fortunately, being a part of a homeowners association might help you save some money on an insurance policy.
Because there are often strict regulations and community standards, residential properties that are within a community with a homeowners association often have regular security watch. Some communities may even have a gated entrance with its own security guard. This can potentially mean there is less likely to be a theft in the area. At any rate, homeowners associations can often provide the perception of higher security, which can act as a theft deterrent. For insurance companies, this would make homes that are a part of an HOA less of a risk, and therefore they may give discounts to those who purchase a policy.
If you are currently not receiving a discount on your homeowners insurance policy and you are a member of an HOA, be sure to ask your local agent. If the company does not currently offer an HOA discount, be sure to ask, as you might be able to negotiate a lower price anyway.
In addition, some insurance companies offer policies that are specifically meant for homeowners associations. Residential insurance policies cover a wide range of costs, including coverage for HOA buildings. Ordinance and law policies are also covered, including the expenses of enforcing community standards. Insurance policies may also cover employee dishonesty expenses if there is a direct loss from the dishonesty of a HOA employee. Liability coverage, which is typical with any homeowners insurance policy, provides protection for directors and officers hired to protect the residential area.