What Type and How Much Insurance Should Our HOA Carry?
HOA homeowners’ insurance is essential to all HOAs. Make sure you purchase the the correct policy for your needs, as otherwise you are opening yourself up to a lawsuit.
Understand Your HOA Governing Documents
How the by-laws are written can dictate what type of insurance an HOA needs, and what falls on the responsibility of the homeowner.
Strategically Minimize Risk
The strategy to minimize your risk begins with the right policy. Find a carrier experienced in HOA homeowners’ insurance. Have them audit you and any existing policy to determine the best policies at the best rates. Some carriers are broader than others, so choosing a broker that can evaluate many carriers for you is key.
What often gets overlooked is that minimizing risk should happen year over year. Michael DeGeorge of Rosenthal Brothers in Deerfield, IL advises that an insurance agent should be guiding HOAs and townhome communities as to when it is in your best interest to go out-of-pocket versus when to make a claim. This also helps to keep your premiums down. Rosenthal Brothers is one of our chosen vendors because they focus much of their business on HOA homeowners’ insurance. As such, they give their HOA clients attention and ongoing service.
D & O Insurance for Homeowners’ Associations
Directors and Officers (D & O) Liability is one of the coverage types unique to HOA homeowners’ insurance. Think of D & O Insurance for Homeowners’ Associations as Professional Liability of sorts, to cover any losses due to actions taken by board members. If you have been a board member for some time, you are well aware that it is impossible to please every homeowner all of the time. Any given week, data shows a large number of homeowners searching Google for how to fight an HOA decision, or how to sue an HOA (source: hrefs.com). When it comes to their home, residents get very emotional.
Most HOA lawsuits are around HOAs failing to follow through on their responsibilities, or for misusing HOA funds. You may think that you will only have ethical board members who wouldn’t do such things. However, we have all been surprised by someone we thought we knew. Plus, not everything is black and white. Finally, regardless of how ridiculous an accusation might be, being sued requires you to have the funds to defend yourself.
Make sure you understand the details of your insurance. There are more options than one would think when it comes to inclusions and exclusions of HOA homeowners’ insurance.
Drawing credit: Stick News on the Daily English Show