How much do you know about homeowners insurance services? Most HOA board members understand that they need insurance, but many do not know the specifics of insurance. You may have many questions about insurance. What type of insurance does the HOA need? How extensive should the coverage be? How do you get HOA insurance? In this article, we will discuss everything you need to know when looking for HOA insurance services.
HOA Insurance Services: 5 Important Things to Understand
HOA board members do not need to be insurance experts. However, they should at least have basic knowledge of HOA insurance. Without it, board members will really have a hard time finding the best insurance policy for their HOA community.
Here are 5 important things you must understand when looking for HOA insurance services:
1. The Different Types of HOA Insurance
To find the best HOA insurance policy for your community, board members must know the different types of insurance policies for HOAs.
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Master Insurance Policy
A master policy is a general policy that includes property insurance and general liability insurance. While this policy can cover a wide range of situations, it is not a complete or comprehensive insurance plan. Most HOAs purchase supplemental policies to cover potential gaps in their master policy.
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Comprehensive Property Insurance
Property insurance has more comprehensive coverage for the association’s physical assets. It can cover cases of vandalism, theft, or damage.
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Comprehensive Liability Insurance
Liability insurance also offers more coverage for accidents or injuries sustained within the HOA’s communal areas. For instance, if a homeowner or guest gets hurt while in the swimming pool area, liability insurance will cover the resulting medical and legal costs.
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Catastrophe Insurance/Natural Disaster Insurance
Catastrophe insurance will cover property damage caused by natural disasters such as hurricanes, typhoons, earthquakes, and floods.
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Worker’s Compensation Insurance
Worker’s compensation insurance will protect the association from legal and medical claims in case employees, contractors, volunteers, or anyone doing a service for the HOA gets injured.
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Directors & Officers (D&O) Liability Insurance
D&O insurance coverage will protect board members from becoming personally liable for the actions they take while performing HOA duties.
As a claims-made policy, D&O insurance will cover 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 the claim was filed, you will be covered.
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Crime and Fidelity Insurance
Crime and fidelity insurance will protect your community from financial losses due to theft, embezzlement, and other illegal activities. Since these criminal acts can be financially devastating, communities must include this type of insurance coverage in their overall policy.
2. Does Your Community Need an Umbrella Policy?
Umbrella coverage is separate from your master insurance policy. It is a supplemental policy that increases the limits of your insurance coverage in case there are liabilities caused by emergencies or unforeseen situations. Having an umbrella policy can ensure that your community is sufficiently covered from liabilities.
3. Check Your Governing Documents for Provisions on Insurance
Your governing documents will likely have provisions on insurance. Before you start looking for an HOA insurance policy, take note of the insurance requirements outlined in your governing documents. For instance, the governing documents may have a list of all assets that must be insured and a minimum amount for HOA insurance. These requirements can serve as a helpful guide for board members when looking for HOA insurance services.
4. Find an HOA Insurance Provider You Can Trust
It’s important to work with an HOA insurance provider that you can trust. If you do not have an existing insurance provider, ask professional peers or other HOA communities for referrals. You can also consult with your association management company.
Many HOA managers have extensive experience working with different insurance providers so they will be able to recommend one that has a track record of success. Your HOA management can even handle insurance for your HOA entirely. Once you find the right insurance provider, they will be able to put a plan together that fits the needs of your community.
5. 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. If you own or manage an older building or community, you will need building ordinance and law coverage. Purchasing this policy is almost always more affordable than paying for the necessary repairs to comply with existing building codes.
Comprehensive building ordinance coverage comes in three parts: A, B, and C. Coverage A includes protection for loss to the undamaged portion of the building. Some local ordinances will require you to destroy buildings that have at least 50% damage and then 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 covers 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 code standards.
Protect Your Community with HOA Insurance Services
If you do not have a proper HOA insurance policy, you will expose yourself and your community to all sorts of liabilities and risks. By now, you know the importance of having HOA insurance, and how to go about obtaining HOA insurance services. Make sure to consult with your HOA management company, HOA attorney, or insurance broker so that they can recommend an HOA insurance policy that meets the needs of your HOA community.
If you need more information about HOA insurance services, do not hesitate to reach out to Elite Management Services today! Don’t hesitate to call us at (855) 238-8488 or email us at help@emspm.com.
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