What Good is HOA Insurance?
Homeowners Association Insurance, also known as HOA insurance, is used to protect the association and the homeowner from various risks and liabilities associated with common areas and shared spaces within the community. There are typically 6 areas of coverage in HOA insurance: liability, property, directors and officiers, crime and fidelity, workers' compensation and umbrella. Here’s a short breakdown of what HOA insurance usually covers and why it is essential
Property
If your HOA has a lot of common areas such as clubhouse, pool, gym or pickle ball court to name a few, this is important as you want to protect the HOA's property as damages to theses areas can turn out to be costly. Property Coverage covers common areas, structures as well as landscaping and outdoor amenities. This type of insurance protects against issues such as vandalism, storm damage and fire to name a few.
Liability
Liability coverage is important as when people or their personal property are within the bounds of the HOA as the HOA and damage, to either person or property, are done on areas the HOA are responsible to maintain Someone could trip on curb and need medical attention or someone could slip at the community pool and could suffer serious injury. In terms of property damage a tree could fall on a car and If you are not covered with Liability then the HOA could be the one to held financially responsible.
Directors and Officers (D&O)
With an HOA board you want to make sure you are covered against personal liability for decisions made while running and managing your HOA. This could include lawsuits against mismanagement, discrimination or other issues that could arise while managing your HOA.
Crime and Fidelity
The HOA is a business entity and like any business entity you need to protect yourself from theft, fraud, or even embezzlement of money or stolen equipment from other board members or employees.
Workers’ Compensation
From employed workers to vendors if they are doing work on and for the HOA you want to make sure you provide coverage for the medical expenses and lost wages if they happen to be injured while working on the HOA.
Umbrella
Umbrella insurance is the additional liability coverage that goes a step further outside of the standard policy. This is especially important if large lawsuits occur as most standard insurances policies might not be enough.
Conclusion
While insurance does get a bad rap HOA insurance is an important factor for effective community management. It can protect the association, the board and its members from financial losses due to any number of issues from property damage, liability claims and theft to name a few. By making sure you have comprehensive coverage, an HOA can safeguard its assets, maintain community standards, and provide a safe and enjoyable environment for all residents.
