One very specific type of business is misunderstood, “HOA’s.” Below is a brief description and some of the coverages and losses HOA’s should be aware of:
Insurance for a Homeowners Association (HOA) typically includes several types of coverages that help protect the association from financial losses that may arise from unexpected events, such as accidents, natural disasters, or lawsuits. Here are some of the key types of insurance coverages that an HOA may need:
- Property Insurance: This type of insurance covers the physical property owned by the HOA, including buildings, common areas, and equipment. This can include coverage for damage from perils such as fire, wind, or theft.
- Liability Insurance: Liability insurance helps protect the HOA from claims made by third parties who have suffered injury or damage as a result of the HOA’s activities or operations. This can include coverage for bodily injury, property damage, and legal expenses associated with defending against lawsuits.
- Directors and Officers (D&O) Insurance: D&O insurance covers the directors and officers of the HOA from claims made against them in their capacity as leaders of the association. This can include coverage for legal fees and damages resulting from lawsuits alleging wrongful acts or decisions by the board.
- Workers’ Compensation Insurance: If the HOA has employees, workers’ compensation insurance can provide coverage for medical expenses and lost wages if an employee is injured or becomes ill while on the job.
Overall, insurance for an HOA can help protect the association from financial losses that could arise from unexpected events, which can help ensure that the HOA can continue to operate effectively and serve its members.
One commonly overlooked type of insurance for an HOA is an umbrella insurance policy.
An umbrella insurance policy provides additional liability coverage beyond what is included in the HOA’s primary insurance policies, such as general liability, property, and directors and officers liability insurance. This additional coverage can help protect the HOA and its members from financial losses resulting from lawsuits or other liability claims that exceed the limits of the primary insurance policies.
For example, if a member of the HOA is injured on common property, such as a community pool, and sues the HOA for damages that exceed the limits of the primary insurance policy, the umbrella policy can provide additional coverage to help cover the costs.
Overall, an umbrella insurance policy can provide valuable protection for an HOA by offering an extra layer of coverage that can help safeguard the association and its members from potentially costly liability claims.
*Remember if a HOA suffers a loss it will be divided by each individual that is part of the HOA. Including every household in the association. Example: if the HOA suffers a $100,000 loss it gets divided by every member. If there is 100 members each member would share $1,000 on top of their yearly dues.