Joining an HOA, also known as a homeowner’s association, is exciting. You get to participate in creating bylaws and ensuring that the residents follow them. You’re also in charge of events for the development and numerous other activities. Since you now partially represent the people who live in your condo, housing development, or timeshare complex, you need to know about the potential risks that both you and the HOA face. From accidents, members causing problems, or the board being up to no good, you need to know what you may face and how to deal with it by having the right insurance policies in place.
Here’s a quick checklist that breaks down the problems and solutions you may face.
Potential Problem #1
Someone on the board is conducting misdeeds, like stealing money, or has made a decision on behalf of the whole board that is controversial and causing issues both with the board and the residents of the development.
Solution – HOA Insurance. This type of policy is designed to cover any financial issues that arise from problems with the board. HOA insurance covers many things, from financial improprieties to lawsuits from homeowners filed about decisions made and enforced by the board and any potential problems resulting from it.
Potential Problem #2
The homeowners who live in the development or building attached to your HOA have insurance on their own properties. The problem with this is that their insurance doesn’t cover the general areas that fall under the purview of the HOA. These common spaces, like gardens, pools, administrative buildings, parking lots, and other things need to be insured should they become damaged due to weather or other reasons.
Solution – Property insurance. A property insurance policy will cover the communal areas owned and cared for by the HOA. Should a storm hit and damage the pool or a fire breaks out during a party at the main building, you’ll need to call in your insurance coverage. By having a plan in place for this very reason, you won’t have to pay out of pocket or assess the homeowners for repairs.
Potential Problem #3
Accidents happen. Those that occur on the homeowner’s property are covered by their insurance, but those policies don’t extend to common areas. What happens if someone trips and breaks a leg in the parking lot or almost drowns in the community pool? The HOA could be found liable for any medical treatments, missing wages, or other costs that result from the accident.
Solution – Liability insurance. A liability insurance policy, along with its sister option, an umbrella liability insurance policy, can pay for anything that the HOA is found liable for. This includes legal fees, court costs, and settlement money that results from a lawsuit.
Have Questions? Contact Charlotte Insurance
Want to learn more about the various types of insurance policies for homeowner’s associations or HOAs? Contact Charlotte Insurance. Our agents can explore and explain all available options and put together the insurance coverage plan your building needs.