Your homeowners association is an important part of keeping your homeowners, their families, and their guests safe and happy. If you are responsible for managing an HOA, one of your many responsibilities is to ensure that the proper insurance coverage protects everyone.
What does proper insurance look like for your particular HOA? Here are six insurance policies you may need to put in place.
1. General Liability Insurance
Any person or organization that owns physical property runs the risk that someone will have an accident while on that property. Commonly referred to as slip-and-fall coverage, liability insurance pays if someone is injured or their property is damaged. The most common areas that an association might face liability include shared roads and sidewalks, a pool or hot tub, and stairways leading to units.
2. Property Damage Coverage
You must protect the HOA’s investment in physical assets and property. Your association likely owns one or more buildings, including outbuildings or offices. Condo associations must usually insure the entire building structure outside of what is required for homeowners to protect. In addition to buildings, the association may own heavy maintenance equipment, computers and technology, or even vehicles.
3. Flood Coverage
Standard property insurance policies usually do not cover floods from an exterior source. Check your property insurance coverage to determine what types of flooding have coverage and for how much. Often, you will find that something like a burst pipe has coverage, while floods from heavy rainfall do not.
With flooding becoming a growing issue for many counties — especially in coastal regions and areas with heavy waterways — your association should seriously evaluate its need.
4. Fidelity Insurance
The HOA must rely on the services of a variety of individuals and companies. You may have one or more staff working regular business hours. Maintenance workers roam the grounds. Vendors come into homes and buildings to make repairs. And Association members perform different services both on- and off-site. Fidelity insurance covers theft or misuse — of your property or others’ — by any of these parties.
5. Directors and Officers Coverage
Directors & Officers Liability Insurance (D&O) provides protection against expenses and damages that may occur as an officer or board member performs their normal organizational duties. Because they have weighty responsibilities and oversee many matters — including things that may cause tension — board members generally need special protection.
What sort of damaging situations could occur? The Board may face accusations of improper management regarding HOA dues, of slander against a vendor or homeowner, or of failure to pay an HOA debt. The claim may not be true, or it could stem from an error someone made in good faith. But it someone goes to court, D&O insurance would cover the expense of defending individuals over such issues.
6. A Master Policy
Many of the common coverage needs for any condo association or homeowners association are bundled into a master policy. This insurance would usually cover damage to shared or public areas as well as liability against accidents that occur on the association’s property. You may want to begin by purchasing a master policy and verifying what it covers, then adding riders as needed.
Does your HOA have the types and levels of insurance protection it needs? Even if you have purchased the correct insurance in the past, now is a good time to reevaluate what changes you may need to make. At Family Insurance Centers, we understand the unique requirements and liabilities of homeowners associations. Call today to talk with one of our knowledgeable insurance professionals. We look forward to discussing your specific HOA needs and finding a policy that works for you.