HOA Master Coverage – What is the Effect on HOA and Owners Getting EQ Coverage?


This blog is a request for feedback and comment. I draft a lot of restated HOA documents and insurance obligations are one of the most important areas. When drafting master coverage there are different schools of thought and I think 3 general options with regard to master coverage when it is required.


  1. To rebuild to original construction or builder’s grade (without remodel  improvements, upgrades, or betterments.
  2. To rebuild with improvements (but not personal property).
  3. Studs out or bare walls.


For each association (I am in California remember) I usually discuss these options when refining the insurance section and also have the board consult with their insurer to make sure we are writing provisions that are not going to conflict with the current policy (or see if it needs to be changed because of some misinterpretation from the existing documents).


Anyway, this blog is not to debate which of these levels of insurance is better or worse, but a client told me this week that the Association’s agent (or broker?) told him that if the HOA carried replacement insurance that was of original construction or builder’s grade, or studs out, that neither the association nor the individuals would be able to get earthquake insurance. This is contrary to my understanding.


I would like feedback from some HOA insurance experts in California – is this true? What should HOAs and the individuals in them know? As I understand it there used to be 2 options through the CEA for individual condo and townhouse owners – one for owners whose HOA had no earthquake coverage and one for owners whose HOA does have EQ coverage. Then I heard the choices went down to 1. I wish I had time to research it myself right now but I am working on release  of a new guide called THE SMALL HOA SURVIVAL GUIDE and it is taking a lot of time. I could use a little help.

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