Published: August 2, 2019
Keeping your HOA insurance up-to-date is vital for so many reasons.
Here are a few tips as to why.
Ensure your governing documents are up-to-date.
The Homeowners Association Board may require an annual review because letting the owners what is covered by the master insurance policy and what additional insurance they should obtain annually is a standard practice in the industry.
Limited Liability for Common Areas
In an HOA, there are common areas that must be insured for the safety of the residents, HOA and the Board. Make sure you have the proper amount of general liability. Most likely, you will asl need to meet the minimum requirement for Director and Officer Insurance (D&O).
Checks and Balances
We often see that HOAs don’t keep their Declaration of Covenants, Codes & Restrictions (CC&Rs) up to date. The CC&Rs are recorded with the register of deeds in the initial phase of development of a townhome or planned community. As the community changed and approved changes are made, the CC&Rs must be updated in the HOA’s Governing Documents.
Casualty Coverage
We recommend you should certainly make sure you have a statement that provides casualty coverage, not necessarily for a stated amount but for the full replacement value of your property.
For example, if the policy covers $1 million and it costs $1.3 million to fix damage that occurs, you’ll have to assess for the difference.
Ensure you have directors and officers coverage so if you get sued personally – which happens all the time – you’ll have your defense costs covered. Be sure to have liability coverage in case someone gets hurt. The standard is $1 or $2 million, and we have seen a lot more policies at $2 million.
Endorsements Needed?
There are a lot of basic exclusions that, unless you get a separate endorsement, they’re not covered under most policies.
Example: A demolition endorsement. Hypothetically, if 70 percent of your building burns down, you’ll need to have it rebuilt. A typical policy will cover rebuilding but not tearing the building down. So you absolutely need a demolition endorsement. Getting rid of debris may not be covered either.
Check in with us and we can share with you the types of endorsements that are common to HOAs.
Dishonesty and Fidelity Bond Coverage
There’s insurance coverage that no wise board would fail to get, and then there’s coverage that your HOA is very unlikely to need, but if it was needed, the board would extremely glad they had it.
That covers the association for theft or the act of wrongfully removing funds, like writing fake checks to fake vendors, by someone like a board member or even the management company.
Our job it to help protect everyone. The residents, the Board and the HOA.
Keeping you protected.
Rick
All Access Insurance in Littleton, CO, who represents multiple insurance companies as a “Broker” and provides products for auto, home, commercial, workers compensation, and much more! Call us today for a free quote at (303) 932-1700