How much do you know about HOA insurance services? Most HOA board members understand that they need insurance, but many do not know the specifics are left with many questions. What type of insurance do you need? How extensive should your coverage be? How do you go about obtaining insurance? In this article, we will give you an overview of what you need to know.
1. Find a trusted Insurance Broker or Agent to work with
Select a broker or agent with a track record of success. If you don’t have an existing insurance provider, ask professional peers for referrals. You can also go to your association management company for advice. Many managers, like EMS, have extensive experience dealing with different types of insurance services and can easily make recommendations or handle insurance for your community entirely. If you find the right provider, they will be able to put a plan together that fits your needs.
2. Why you need D&O Insurance
HOAs usually need to obtain Directors and Officers (D&O) Insurance. This policy protects board members along with committee members, staff, volunteers, and board member spouses from lawsuits or allegations that result from any decision they make on behalf of the HOA. D&O insurance is a claims-made policy, which means it covers all claims that are made while the policy is in effect. This is important because many people do not file a claim right away. If you have D&O Insurance at the time your claim was filed, you are covered.
3. Your umbrella policy doesn’t supplement your property insurance
An umbrella policy that is part of insurance for HOA will add to your general liability but won’t affect your property policy. Because of this, you will need to buy adequate property insurance. Do not mess around with the most basic plan you can find. The basic plans will not leave you with enough coverage, opening you up to several liabilities.
4. When to buy building ordinance and law coverage
Property insurance will not cover damage to your building if it does not meet current building codes. So if you own or manage an older building or community, you will need building ordinance and law coverage if it was built before current building codes were out in place. Purchasing this policy is almost always more affordable than making the necessary repairs to comply with existing building codes.
Comprehensive building ordinance and law coverage come in three parts: Coverage A, B, and C. Coverage A include protection for loss to the undamaged portion of the building. Sometimes local ordinances require that buildings that sustain 50% damage or more have to be destroyed and rebuilt to meet current building codes. In this case, even if your building only incurs partial damage, Coverage A will see the claim as a total loss. Coverage B will cover the costs of demolishing your building, even the undamaged portions. Coverage C will cover the additional costs of rebuilding an old building to meet current building code standards.
Protect your community with HOA Insurance Services
If you do not have proper homeowners association insurance, you expose yourself and your community to all sorts of liabilities and risks. It is best that you speak with a qualifies insurance broker or your HOA management company so they can recommend you with a policy that fits you best.