What’s the difference between planned unit development (PUD) and condo insurance, and why does it matter for HOA communities? As an insurance agent, understanding the distinctions between PUD vs. condo insurance — and how excess liability coverage fits in — can help you guide your clients toward better protection.
PUD Vs. Condo Insurance: Key Differences
PUDs and condominiums might appear similar, but their insurance needs are quite different.
PUD Insurance
In a PUD, the homeowners typically own both the structure and the land it sits on. Thus, the homeowner is responsible for insuring the entire property, including the home and the land.
PUD insurance works similarly to a traditional homeowners policy, offering protection for the dwelling, personal liability, and property damage.
The HOA in a PUD is generally responsible for maintaining common areas like parks or community amenities but not for insuring individual units.
Condo Insurance
Conversely, in a condominium, the HOA’s insurance — also known as a master policy — covers the building’s exterior and shared spaces like hallways, lobbies, and other common areas.
Condo owners are responsible for insuring their unit’s interior, including personal belongings, walls, floors, and fixtures.
This difference in coverage responsibility between PUD and condo insurance is a crucial distinction that insurance agents must understand when advising HOA clients.
What Is the Difference Between Primary and Excess Liability Insurance?
Now that we’ve covered the basics of PUD vs. condo insurance, let’s shift focus to liability coverage.
Primary liability insurance provides the first layer of protection when there’s a claim, covering bodily injury, property damage, and other liabilities. However, it has coverage limits. Once those limits are reached, the HOA could be left vulnerable to further risks.
That’s where excess liability insurance comes in. If a claim surpasses the primary liability insurance’s coverage limits, excess liability kicks in to cover the additional costs.
For HOAs, excess liability is crucial because it protects the association from large claims or lawsuits that could otherwise deplete their financial resources.
Why Excess Liability Coverage Is Essential for HOAs
Excess liability coverage plays a vital role in protecting HOAs from significant financial losses. Since HOAs manage common areas and amenities, they are often exposed to accidents or lawsuits.
Imagine a scenario in which a guest suffers injuries at the community pool or a tree falls onto a neighboring property, causing severe damage.
If the claim exceeds the HOA’s primary liability insurance, excess liability coverage ensures the association doesn’t have to bear the financial burden.
Without this extra layer of protection, HOAs could face financial strain, potentially leading to a reduction in community services or increased dues for homeowners. In fact, a 2023 survey revealed that 91% of HOA board members reported having to increase their expenses unexpectedly due to rising maintenance costs.
For insurance agents, it’s essential to stress the importance of excess liability coverage to HOA clients. It’s not just an added bonus — it’s a necessary safeguard for any association that wants to protect its assets and manage risks effectively.
How Insurance Agents Can Guide Their HOA Clients
As an insurance agent, your expertise is invaluable when it comes to helping HOA clients navigate the complexities of PUD vs. condo insurance and excess liability coverage.
Here are some practical tips to guide your clients effectively.
Assess Their Specific Needs
Conduct a detailed review of each HOA’s unique insurance needs, depending on whether they manage a PUD or condominium. Ensure their coverage meets their obligations and responsibilities.
Discuss the Importance of Excess Liability
Make sure your clients understand how excess liability coverage works and why it’s essential for protecting their assets from large, unforeseen claims that could put their finances at risk.
Educate the Board
HOA boards may not always be familiar with insurance policies’ nuances. Offering clear, concise explanations about PUD vs. condo insurance and excess liability can help them make informed decisions about coverage.
By providing this level of guidance, you help your HOA clients secure comprehensive insurance protection and build lasting relationships.
Get in touch with us today to learn how Kevin Davis Insurance Services can help you offer the right PUD, condo, and excess liability coverage solutions for your HOA 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.