HOA fees fund an insurance policy (sometimes called a ‘master policy’) that covers the common areas of the community. A master policy differs from an individual homeowner’s insurance policy, which protects a unique property or the contents and interior of a home or condo unit. The master insurance policy usually covers damage caused by hazards such as fire, extreme weather and sometimes flooding and earthquakes. It may also protect homeowners from lawsuits, personal injury claims, and acts of fraud by those managing the HOA’s money.

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