When it comes to common property insurance, the HOA must make sure that all areas, physical buildings and structures open for communal use by the members living within the HOA, are insured against damage and public liability.
Each of the individually owned properties within the HOA, however, must be insured by the homeowners at their own expense.
It’s also in the HOAs interest to have insurance to protect the estate from potential lawsuits that might arise from accidents or problems occurring on the HOA’s property, for example, if someone were to injure themselves while on the property.
If the injured person was to sue the HOA for damages, and there is no insurance in place, it would become the responsibility of the members of the HOA to cover the costs.
It’s, therefore, imperative that they have sufficient insurance to cover all legal costs and expenses associated with any prospective claim. It's worth learning where the HOA insurance stops and yours should begin, so as to make sure no gaps exist that could leave you without coverage after damage occurs
What If the HOA Fails to Obtain Sufficient Insurance?
Your HOA should protect your interests as a homeowner. If your HOA purchases inadequate coverage or none at all, fails to buy coverage for a likely source of damage (such as flooding), or fails to keep up with premiums, it jeopardizes the investment you've made in your home.
If your HOA's governing documents require it to purchase certain types of insurance, you have the right to examine the paperwork and make sure that the HOA does what it is supposed to do.
Insuring your HOA property accurately can prevent the potential for hefty out-of-pocket expenses for unit owners at the time of a major property loss. Your Association should be insured, at full replacement cost. Information used to calculate building values should be based on research and accurate square footage obtained by your broker.
What is Contingent Liability?
Contingent Liability provides coverage for undamaged portions of property. For example, if half of a building burns down, the property insurance coverage will replace the half of the building that is damaged.
What is Third Party Bodily Injury Cover?
Third party bodily injury losses are slip and fall claims. Whether a person is supposed to be on the common area premises of the association or not, if he or she were to get injured, this cover would protect the Association.
What is Third Party Property Damage Cover?
This insures damage done to someone else’s property by your property. For example, a common area tree may fall onto a neighbour’s car or house. You want to be prepared for these circumstances.
Other Necessary Cover?
What is Directors & Officers Liability?
D & O Liability is defence (expenses) and indemnity (awards and settlements) for wrongful acts and allegations against the board of directors as well as the Association. This coverage is also known as Errors and Omissions Liability as this coverage provides for these types of losses as well.
Typical D & O liability claims range from monetary to non-monetary, breach of contract to discrimination, to libel/slander. The majority of claims for Homeowners Associations are non-monetary, such as a claim that the board failed to purchase adequate insurance.
Types of Cover that Should be Automatically Included
Other Types of Cover available to HOAs
As your insurance broker, we function as the middle man between your Association and your Insurer, so feel free to ask for our advice and recommendations. You should not only feel protected by your insurance coverage but also feel comfortable with the hands in which you’ve placed your cover.
What you need to know ... These are just some of the most frequently asked questions we receive about our HOA cover.