Homeowners & Condo Association Insurance

Homeowners Associations (HOAs) and Condo Associations (COAs) are crucial for the upkeep of many residential communities. But HOAs and COAs can be threatened by a variety of risks and holes in insurance coverage. And every homeowners association and condo association is different, which is why the right insurance coverage and regular communication with your licensed agent is vital.

What are my risks?

Only property owned by the HOA or COA can be protected by its insurance, yet it still can be held liable for accidents it could not control. As a result, communities and condo buildings present challenges when tailoring adequate coverage for all parties involved.

Nearly anything HOAs/COAs are involved with can be a source of trouble. Unfortunately, many times they aren’t aware of potentially costly risks. Here are just a few frequently missed risks to HOAs/COAs:

• Board negligence
• Equipment maintenance malfunction
• On-the-job staff injuries
• Liquor liability
• Inadequate auto coverage
• Inadequate crime coverage

For any HOA/COA, an ounce of protection can go a long way. Analyzing and shrinking your potential risks is the best way to put a stop to problems before they start.

Where to look.

Lapses in HOA/COA insurance coverage usually occur in one of two areas:

1. Damage to personal property
2. Liability or property damages incurred by HOA board members

Many HOAs/COAs don’t consider damage to renter or owner’s personal property their responsibility, which is typically an accurate view. However, in some circumstances, the HOA/COA can be held accountable for damages incurred by machinery, plumbing or landscape it is responsible for maintaining.

Many HOAs/COAs also don’t consider the inherent risks that having officers creates. Too often they consider their board members inscrutable, only to find out about theft or embezzlement of HOA/COA funds. Similarly, poor repairs or dishonest actions made by anyone hired by the board can cause the HOA/COA to be held liable for damages or loss of private property.

Dealing with the Risks.

HOAs/COAs take on a variety of risks. While many are prevalent and destructive enough to demand insurance, others may require tough decisions to be made by the HOA/COA. Some risks require specialized insurance, while others that are covered can cause large increases in premiums.

Here are some strategies to dealing with the risks.

1. Accepting risks: Accepting a risk means that you decide to accept a situation “as is” and are willing to deal with the consequences if they should occur. For example, an HOA/COA in Kansas would consider not insuring against earthquakes. The risk is too low to justify the added premiums costs.
2. Reducing risk: Risk reduction is done through education, inspections and behavior change. The idea is to so greatly reduce the chance of the risk occurring that it becomes acceptable. Education on the importance of having each homeowner or condo owner to have the correct policy; both to protect the unit owners but also the board in case of a claim. In some cases, reducing a risk may mean completely removing a fixture or policy to eliminate any potential problem. Risk reduction is very useful—whether a risk is insured or not. A policy may cover the HOA/COA in the event of an accident, but prevention of that accident keeps your association’s premiums down and its reputation high.
3. Insuring risk: Simply make certain someone is willing to undertake it. Whether it’s through insuring property or contracting out maintenance, diverting risk to professionals guarantees protection against the costly threats that may face your HOA/COA.
4. Updated bylaws:  Make sure bylaws are always up-to-date, as they can be a D&O claim that is often overlooked.
5. Conduct loss assessment risks:  Require all unit owners to conduct loss assessment risks.   

Every HOA/COA is Different.

Comprehensive coverage requires regular, detailed communication with an experienced agent. Contact us to make sure your coverage is airtight and help us better understand all the needs facing your HOA or COA.