Condominium homeowners associations (HOAs) face unique risks and liabilities that require comprehensive insurance solutions. With the steady growth of community associations, now numbering over 365,000 nationwide, the need for robust insurance coverage has never been greater. One crucial aspect of protecting these associations is excess liability insurance. This coverage provides an additional layer of protection beyond primary policies, safeguarding the association’s assets and financial stability.
How Is Condo Insurance Different from Homeowners Insurance?
Understanding the differences between condo insurance and homeowners insurance is essential for advising condominium HOAs.
Coverage Scope
Homeowners insurance covers the entire property, including the building and land. Condo insurance, on the other hand, focuses on the unit’s interior and personal property, while the HOA’s master policy covers the building’s structure and common areas.
Master Policy Coverage
Condo associations usually have a master policy that covers common areas and the building’s exterior. This policy may be a bare wall, single entity, or all-in policy, each offering different levels of coverage for the interior of the units.
Cost Structure
The cost of condo insurance is typically lower than homeowners insurance because the master policy covers the building’s structure.
Loss Assessment Coverage
Condo insurance often includes loss assessment coverage, which helps cover the unit owner’s share of any special assessments levied by the HOA for expenses like property damage or liability claims.
Association Requirements
HOAs may require unit owners to carry specific types of insurance or maintain certain coverage limits to ensure adequate protection for the entire association.
Understanding Excess Liability Coverage for Condominium HOAs
Excess liability insurance provides additional coverage beyond the limits of primary liability policies.
- Coverage limits: Excess liability insurance extends the coverage limits of underlying policies, such as general liability, directors and officers liability, and employment practices liability.
- Policy exclusions: Like all insurance policies, excess liability insurance has exclusions. Common exclusions include intentional acts, pollution, professional services, and certain contractual liabilities.
- Key features: Excess liability insurance offers high coverage limits, a broad coverage scope, and the ability to cover multiple underlying policies. These features make it an essential component of a comprehensive risk management strategy for condominium HOAs.
Risks and Liabilities Faced by Condominium HOAs
Condominium HOAs face several specific risks and liabilities that make excess liability insurance vital.
Common areas, such as lobbies, gyms, and pools, are susceptible to damage from various sources, including natural disasters, vandalism, and accidents. Slip-and-fall incidents, swimming pool accidents, and other personal injuries can lead to substantial liability claims against the HOA. Excess liability insurance provides the necessary coverage to handle these claims.
Recommending Excess Liability Coverage to Condominium HOAs
Insurance agents play a crucial role in recommending excess liability coverage to condominium HOAs. Here are some tips:
- Assess the association’s risk profile, including the size, location, and activities of the community.
- Identify any gaps in the association’s current coverage, and recommend excess liability insurance to ensure comprehensive protection.
- Regularly review and update the association’s insurance policies to adapt to changing risks and ensure continued adequate coverage.
Learn More About Excess Liability Insurance
Give us a call today to learn more about how excess liability insurance can protect your condominium homeowners association. Our team at Kevin Davis Insurance Services is here to help you navigate your insurance options and ensure comprehensive coverage for your clients.
About Kevin Davis Insurance Services
For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at (855)-790-7393 to speak with one of our representatives.