Homeowner Association Insurance 101

Property managers and boards of directors of a Homeowner Association (HOA) are charged with finding the best insurance coverage for the best price. These are also referred to as Master Policies.

The best types of Master Policies include adequate insurance to cover property and third-party liability damage.

An HOA policy will undoubtedly include Property coverage for the exterior structure and Liability coverage for third-party claims.

But there are some additional types of coverage that are just as important and need to be included on the policy as well.

They are:

Fidelity or Employee Theft Coverage:

This is to protect the HOA from loss by a person handling the association’s funds that are made up of the monthly fees. This coverage is required by law in some states.

Directors and Officers Coverage:

Since the HOA is under the auspices of a board of directors, this is an important piece of comprehensive coverage.

If unit owners are not happy with decisions of the board and feel they are being negligent regarding the best interests of the HOA, they can sue for damages. Directors and Officers coverage will respond to such claims.

Water Damage Coverage:

Since an HOA is responsible for the structure of the building, claims related to water damage fall under its responsibility.

Leaking or burst pipes could cause damage to several units. Coverage can be provided on the property policy.

However, a large number of claims can drive up the ratio of paid-out losses to premium, so the best management technique to use here is prevention. Inspection and maintenance of pipes prior to the cold weather could be a much less expensive way to prevent claims.

These are just some of the areas that my office can help you with when trying to place coverage for your HOA