Education Center
Deductibles, Limits, and Exclusions...Oh My!
Posted on June 28, 2021 3:00 PM by Michael LaPoint
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General
Making sense of HOA insurance policies can be daunting and challenging. Ensuring you have proper coverage is one of the most important and often overlooked tasks a Board can accomplish to protect its community. The best way to ensure proper coverage is to partner with an insurance agency that specializes in HOA insurance. Even after partnering with a qualified insurance agency, you should make sure quoted policies provide adequate coverage. Please see the below tips/inclusions to help you as you embark on this journey.
Property Coverage
- Special Form coverage. This means that your property is protected from all losses not specifically excluded by the policy. This is the most thorough coverage Form.
- Replacement Cost coverage. This means that insurance will pay to repair or replace damaged property without deducting for depreciation.
- Adequate Property Valuation/Limits should closely mirror property values defined by your Reserve Study. Your Reserve Study may, however, include items that would are not covered by insurance such as underground irrigation components, asphalt, etc.
Liability Coverage
- Include Hired & Non-Owned Auto coverage.
Directors & Officers (D&O) Coverage
- Defense Costs should be paid outside of policy limits.
- It is important that this policy include:
- Breach of contract
- CC&R disputes
- Third-party discrimination
- Non-monetary claims
- Full prior acts
- Duty to defend
- Property Manager as additional insured
Crime Coverages
- Best practices dictate that your crime coverage include all amounts in Reserves and three (3) months of operating expenses.
Workers’ Compensation
- Best practices recommend that all communities carry this relatively inexpensive coverage to protect from claims from volunteers and vendor employees in the event the vendor’s insurance lapses or is canceled.
Umbrella Coverage
- Ideally, this coverage will provide additional coverage for both General Liability and D&O claims.
As trusted community association management professionals, we are happy to evaluate your current insurance coverage to help ensure your community is properly protected. Please contact us today if you need assistance or a second opinion as it relates to your community’s insurance needs.
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