Community associations are rapidly becoming more common throughout the entire United States. According to the Community Associations Institute’s most recent National and Statistical Review, an estimated 69 million Americans live in some type of community association, including homeowners associations, condominium communities and cooperatives. Homeowners associations account for over 50 percent of the 342,000 associations reported in 2016, with condominiums representing between 42 and 45 percent.
Community associations play a crucial role in the lives of their community members as well as the general housing market. The approximately 55,000 community association managers that are scattered across the country hold a great deal of responsibility for their residents, especially when it comes to ensuring the financial stability of the community.
Not only is an HOA responsible for the well-being of the community, it also bears the burden of any and all of the risks. With regulations that vary by state, city, or even from association to association, a general insurance plan can’t meet all of the needs a community might have. Nearly every official action and function an association executes can be a source of liability for the community, so it’s important to share any and all risks with your insurance agent to be sure the coverage is comprehensive. Below is a list of some important insurance policies HOAs should consider in addition to their general insurance policy:
- Comprehensive General Liability: This comprehensive policy protects the association from general liability claims that aren’t otherwise covered in their general insurance policy, and can be especially useful by offering liability coverage to any location outside of community property where an association function or meeting is being held.
- Discrimination Coverage: When a resident doesn’t pay their mortgage and enters the foreclosure process, it can sometimes be a messy situation. Discrimination Coverage helps protect HOAs from evicted parties claiming they are being discriminated against because of class, race, etc.
- Workers’ Compensation Coverage: Even though an association may be run strictly by volunteer employees, it can still be liable for any injury resulting from association duties. Workers’ compensation is essential for HOAs to cover any injury claims that may arise.
- Director’s and Officer’s Liability (D & O): This type of coverage specifically covers the directors and officers from personal liability in the event of any claims against the homeowners association for alleged wrongful acts, such as misappropriation of funds, paperwork errors, etc. (This does not cover willful wrongdoings.)
- Employee Dishonesty Coverage (Fidelity Insurance): In the event that an HOA employee does commit any willful wrongdoing, such as theft, fraud, or embezzlement, this coverage would help the association with the resulting loss.
- Comprehensive Equipment Coverage: This helps protect against financial loss from property damage resulting from a sudden and accidental mechanical breakdown. It’s typically used to supplement an HOA’s property insurance policy, and can be written to cover a specific type of equipment – such as water heaters – or be more of a blanket policy.
No two associations are exactly alike, so it’s important to partner with a qualified and knowledgeable insurance representative who can help decide what policies to choose. Even with comprehensive protection for the association, community members should still make sure their own property is properly insured against all types of loss as well. As a leader in the community, your HOA coverage sets an example for residents on making insurance a priority.
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 (877) 807-8708 to speak with one of our representatives.