Supplemental insurance protecting a homeowner’s association (HOA) from earthquake-related damage typically covers common areas and buildings owned by the association. For example, this could include damage to a clubhouse, swimming pool, or exterior walls of condominium buildings. Individual unit owners are usually responsible for obtaining coverage for the interiors of their units.
Given the potentially catastrophic financial impact of earthquakes, this type of coverage is crucial for HOAs in seismically active regions. It can protect the association’s financial stability by mitigating the costs of repairs and rebuilding after an earthquake. Without such coverage, HOAs could face significant special assessments levied on homeowners, potentially leading to financial hardship and protracted legal battles. Historically, the absence of adequate earthquake insurance has led to the dissolution of some HOAs following major seismic events. The long-term consequences can include depressed property values and extended community disruption.
