Navigating Homeowners Associations: Understanding How HOAs Work and Ways They Can Impact Your Insurance Needs

June 1, 2022

Whether you are involved or interested in real property, you might have heard of community associations like HOA or even considered joining one.

The popularity of HOAs has been rapidly growing over the last few years. In 2018, around 27% of U.S. residents lived in private communities like HOAs. Today, more than 50% of property owners choose to be a part of the community association. But before joining it, any house owner needs to understand what HOA offers and how it works.

With that in mind, we have collected all the crucial information on the association’s peculiarities, like the pros and cons of being a member, HOA insurance details, and standard regulations.

Homeowners Association (HOA) Explained

HOAs are generally created by and within the neighborhoods of privately owned houses or condominiums. As mentioned before, HOA is a type of community association, which is a general term for various union forms.

Community associations are prevalent in America. According to the Community Association Institute, 351,000 officially registered communities in the U.S. by the end of 2019. And at this time, 75.9 million people live in different types of these unions around the United States.

So how can you become a member? There are only two essential requirements to become an HOA member — applicants need to buy a house or a living space within the neighborhood and pay requisite fees. Every homeowner association is aimed at enforcing property-specific rules and limitations. It is common for HOAs to provide a roadmap for owners — Covenants, Conditions, and Restrictions. It is also known as CC&Rs and is typically issued to each property owner.

HOA Day-To-Day Operations & Management

Every association elects a board of directors. And their role is not at all symbolic. On the contrary, it requires time, effort, and devotion to common goals.

The HOA board is the governing body that legally enforces specific rules and regulations — the set of norms — and takes care of the shared spaces within the HOA area.

The rules and limitations often include particular restrictions like landscape or exterior renovations. They may also indicate maintenance standards, appropriate noise levels, penalties, and much more.

Large HOAs often need help with association management. For this reason, HOA boards can hire management companies. They typically take care of bookkeeping, bank accounts, the HOA’s budget, and, in some cases, full management.

Each association may have different requirements and limitations. But remember that the board has the final say regardless of the issue. For instance, you might not be able to use a flashy paint color or create a lush garden. When it comes to the safety or cohesion of the neighborhood, the board has the final authority.

Key Takeaways:

  • If you own a property within the HOA area, membership is obligatory
  • Members have to pay the set fees
  • HOAs have the ultimate authority when it comes to design codes and standards.
  • Homeowners Associations have executive boards managing all the HOA-specific issues.
  • Large-scale HOAs hire management companies to ensure proper day-to-day operations.

Being a member of the association implies more than buying a home, paying fees, or following the rules. It also entails specific demands when it comes to insurance.

What Is HOA Insurance?

It is only natural that such organizations as HOA take out insurance to cover the communal territories.

The membership essentially requires paying your dues for the insurance. This way, the HOAs can ensure two things:

1) The safety of guests while they are using communal areas;

2) Coverage of damage expenses if any harm is done to shared spaces.

Apart from the association policy, owners might need to take out and pay for the homeowners or condo insurance. That is why before owning both, it is crucial to make sure that you are not overinsured. If you already took out a policy before becoming an HOA member, contact your provider and figure out your next steps.

The association policies, also known as master policies, cannot cover any injuries or damages that happened on your property or inside your home. The same applies to your items. If anything gets stolen anywhere else except for the communal space, the HOA insurance will not be able to cover it or offer any financial support.

The master policy also has specific damage limits. If it exceeds the limit, the owners might be required to chip in and help the association cover the costs.

Insurance terms often depend on the type of private community. In some cases, members can own parking areas and common spaces apart from their houses or units. However, it also means that they are fully responsible for all the maintenance issues.

PUD vs. HOA In Real Estate

Some U.S. residents choose to become members of PUD communities. PUD is an abbreviated name of Planned Unit Development and implies self-contained towns with relatively small communities.

How is it different from an HOA? First off, there is generally a difference in regulatory standards, but PUD is still closely tied to an HOA. For instance, being a member of a PUD community still requires paying your HOA fees. So at this point, both communities might seem pretty similar on the surface. But make no mistake, PUD membership may result in more expenses because of the amenities, land ownership, and insurance costs.

Unlike HOAs, PUDs do not have to get FHA approval. Besides, they can include residential units, recreational areas, commercial centers, and more. Another difference lies in land ownership. As mentioned before, community members can own more than their living spaces. But it comes with extra duties and responsibilities like maintenance and liability coverage.

PUDs often have a less restrictive environment when it comes to design preferences and the structure of buildings. Even so, you can find PUDs imposing even more strict community rules than HOAs typically have.

What Homeowners Associations May Regulate

HOAs can oversee and regulate a wide range of activities within the neighborhood. And since there is no predetermined list, some associations may have different limitations. Exploring the standard requirements can help you better understand the sought-after uniformity and functionality.

Here is what the associations may choose to regulate within the community:

  • The size and type of pets
  • Paint color, sidings, and other exterior alterations
  • Landscaping choices
  • Pools and outdoor fountains
  • Vegetable gardening
  • Climbers, swings, trampolines, and other outdoor structures
  • Noise levels
  • Curfews
  • Smoking
  • Outdoor lighting

Becoming a community association member implies recurrent interventions with your daily life or gardening choices. It might result in disputes. All you have to do is be prepared and informed.

How To Deal With HOA Disputes

As you can probably tell by now, the disputes are pretty standard, especially considering the diversity of the communities.

When it comes to neighbor-to-neighbor disputes, they are often resolved without the board’s intervention. But if the argument reaches its limit, they have to step in and mediate.

Here are the most regular causes of the arguments between the community neighbors:

  • Disturbance of the peace due to the noise (loud music, house parties, musical instruments, loud barking, etc.)
  • Uncontrolled children
  • Various maintenance issues (overflowing garbage, lawns overgrown with grass, etc.)
  • Strong and unpleasant smells (smoking, vaping, cooking, etc.)
  • Aggressive or illegal behavior
  • Intentional violation of the community rules

So what about neighbor-to-board disputes? Here is an example of a situation you might encounter. Let’s say that the enforced rules somehow disrupt your daily life. You can also believe in being wrongfully accused of going against these rules. In this case, you can have a dispute with the HOA. But bear in mind that the board will always put the community’s interests above everything else.

Here are some of the common reasons for the disputes between members and HOAs:

  • Wrongful accusations on behalf of the board
  • Fines and penalties imposed on the unit or house owners
  • Varying interpretations of limitations and covenants
  • Selective approach to the enforcement of rules
  • Disagreements about the fund administration

On rare occasions, disputes can lead to lawsuits. The most common reason for the escalation is when one of the parties (or both) acts out of spite. Naturally, the best way to resolve any conflict is peacefully, reasonably, and amicably.

As mentioned before, fees and penalties can cause disputes. That is why members need to understand what they are paying for and why.

What Is HOA Insurance?

What Are HOA Fees?

The fees can vary dramatically, but they generally cover the utilities and expenses associated with the communal spaces like lobbies, pools, swings, or elevators. In some cases, associations can impose a special fee to cover capital repairs. If the funds are insufficient to sustain expensive renovations or replacements, it might happen.

Naturally, fees depend on what the association provides to its members. As a rule, a wide range of services results in more significant payments.

The fees are generally directed towards:

  • Covering electricity bills (shared areas and spaces)
  • Landscaping and parking space maintenance
  • Taking care of the community pools, clubhouses, etc.
  • Enforcement of CC&Rs

Now that you have learned about the HOA peculiarities, it is about time we have summed up and considered its pros and cons.

Strengths And Weaknesses Af Being An HOA Member

It is no secret that the community guidelines and rules are aimed at preserving property values. And while most of them are appearance-oriented, they are designed to ensure a picture-perfect living environment, ideal condition of properties, closer relationships between neighbors, and timely repairs.

Naturally, the uniform appearance of the community buildings and the area seems to be a priority, but HOAs do not focus exclusively on this goal. As mentioned earlier, associations are responsible for the amenities, landscapes, additional services, snow removal, and much more. And that is why members are required to pay fees.

High fees, somewhat unreasonable rules, and the inability to customize the property are generally considered the top three drawbacks. But let’s break down all the advantages and disadvantages of HOAs for illustrative purposes.


  • Protecting property and community values
  • Providing numerous services
  • Allowing self-governance
  • Setting the rules and enforcing them


  • Setting dues, imposing special and regular fees
  • Enforcing strict rules and limitations
  • Operating ineffectively
  • Inexperienced board members and amateur management

Like any administrative authority, an HOA can be effective and professional, or it can misspend and mishandle the community-specific issues.

The principal reasons for lawsuits against HOAs are pet restrictions, failure to repair and maintain, fraudulent actions, and overcharges. But that does not prove that all the HOAs are evil, manipulative, and self-indulgent organizations. Association can be a perfect option for you if you carefully review the CC&Rs, talk to the board members, interact with the community, and find out about the insurance peculiarities.

Frequently Asked Questions

Does Having HOA Insurance Negate The Need To Take Out Homeowners Insurance?

In most cases, members need to take out additional insurance. It has to do with the coverage provided by the master policy — it covers only communal areas and liability damages at shared spaces. That is why owners typically need to look for additional protection.

Naturally, your final choice depends on numerous factors, including the type of property and community association. House and unit owners typically choose homeowners or condo policies.

What Do Dues And Fees Typically Cover?

For HOAs, it is all about taking care of communal spaces like patios, pools, clubhouses, tennis courts, and much more. As a rule, dues go towards the utilities: sewer fees, garbage disposal, etc. As for special assessments, an HOA can impose those only if the funds are insufficient.

What Is the Size Of An Average Fee?

The dues and fees may vary substantially. In some cases, monthly fees range from $100 to $600. But the size of the expense depends on the variety of services the association offers and provides.

As a potential member, you need to find out more about the quality of management and talk to the current community members to understand if a specific HOA is right for you.

What If I Do Not Pay The Fees?

Refusing or failing to make your monthly or annual payments can result in active actions on behalf of the board. The HOA will likely act following the contract. It means that it can either charge additional late fees or file a lawsuit right away, place a lien in your unit or house, or initiate a foreclosure.

Do Associations Have Any Legal Powers?

They sure do, but the levels may vary. Any association has the authority to set and enforce the policies, limits, and rules. They also can allocate the budget, charge fees, and impose penalties.

How Do The Associations Handle Required Purchases?

It is only natural that the community needs to make an insignificant or significant purchase from time to time. For the most part, the managing company or a board member handles the purchase using a community account or a credit card. The board representative typically does the shopping and afterward submits the receipts to receive a reimbursement. The managing company makes the purchases and adds the expenses to the invoice.

Is It Possible To Opt-Out After Becoming A Member?

In most cases, it is not an option. Once you buy a living space or a house, move to the area, and become a member, you are a part of the association and the community. It does not mean that you will automatically become a board member, though. It means that you will have to follow every rule, mind every set limit, and pay regular fees.

If you feel strongly about leaving the association, there is a way to do that. But bear in mind that it will likely be lengthy, costly, and troublesome.

You can try to dissolve an HOA, but you will have to talk to your neighbors and find the ones feeling the same way about their HOA contract. Then, you have to organize a vote to get 80% of the members to vote for dissolving the community.

Before initiating this risky procedure, read the CC&Rs carefully. It should provide all the essential information on the process. Given that this is a legal process, you might find it helpful to consult with a lawyer or a legal advisor before taking any actions.

Victoria Berezhetska

Victoria Berezhetska is a Content Lead at and an expert contributor to CoverExplore. She has a Bachelor of Science degree in Business Administration, with extensive working experience as a PR specialist and content writer. At CoverExplore, she helps customers find the right educational material through easily digestible blog posts and buying guides backing their insurance coverage choice. Victoria covers diverse topics around digital and insurance marketing, including auto, home, health, and life insurance.

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