4 Things You Need to Know About Insuring Your HOA

Written By Charlotte Insurance on March 12, 2024. It has 0 comments.

a graphic reinforcing the importance of having an HOA insurance policy

Running a homeowner’s association involves keeping track of a number of different things. Not only do you need to enforce the HOA rules and make sure that everyone is paying their dues, but you’re also in charge of the insurance policies that need to be in place should something go wrong. What types of policies do you need? What do you need to know before selecting your insurance plans? Both of those questions and more are answered here.

1) A Policy Will Help You Avoid Special Assessments

When things go wrong and the HOA needs to pay for something large out of pocket, like a legal settlement due to someone slipping and falling in the lobby of the HOA-operated building, they ask the residents and members for special assessment fees. These fees are designed to cover the cost of the settlement, in this example, to avoid bankrupting the HOA. Thankfully if the right insurance policies are in place, this won’t happen.

2) Insurance Need to Cover the Parts of the Building the HOA is Responsible For

Depending on the type of complex the HOA oversees, the individual residents are responsible for ensuring their individual homes or their condo units with the appropriate insurance policies, while the HOA is required to cover the rest. In the case of a condo building that’s built like an apartment building, the HOA covers the main structure itself and the common spaces. These are usually insured with a HOA master policy, although standard property insurance may do the job as well.

3) Director’s and Officers’ Insurance Exists

An HOA is typically run by a director, as well as a small group of officers. All of them are supposed to function as a “checks and balances system” to ensure that the HOA funds are used appropriately and according to the bylaws. What happens when this system breaks down and someone involved is caught misusing funds and a lawsuit is filed? Or when someone sues the HOA board for some reason? This is when a directors and officers’ insurance policy would step in to help cover fines and penalties.

4) General and Umbrella Liability Insurance Policies Are a Good Idea

A typical HOA master insurance plan includes general liability, but it’s always a good idea to double check. In addition, an HOA might need an umbrella liability policy as well, just in case something happens that doesn’t fall under what the typical general liability policy covers. These policies have a coverage cap on them, like similar options for other businesses, and they are a great idea to have in place in case of an accident where the HOA is found liable for someone’s injuries or for anything else that happened under their purview.

Have Questions? Contact Charlotte Insurance

Want to learn more about getting insurance for your homeowner’s association? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your HOA needs.

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