Community associations, such as HOAs, need financial protection to help ensure safety for the most unpredictable moments. Crimes can have a significant negative impact on these organizations, and recovery can be difficult without insurance. One of the best ways HOAs and other community associations can protect themselves is with crime insurance. This type of insurance will provide coverage for various crimes that can occur.
Community Association Finances
Community associations typically have multiple sources of revenue, including:
- Homeowner dues: Homeowners who live in an HOA must pay a monthly, quarterly, or annual HOA fee, one of the primary sources of income for community associations.
- Special assessments: When a significant repair or improvement is needed, the community association can acquire the necessary funds from the homeowners.
- Initiation fees: When new people move into the HOA, there are sometimes initiation fees, a one-time payment that establishes the new resident in the community.
- Fines and penalties: When homeowners violate the community association rules, the association often charges fines or penalties.
These are just a few revenue sources for HOAs and other community finances. Due to the multiple different sources of income, crime insurance is essential to prevent funds from being lost.
The annual budget relies on these sources of income, and a loss of revenue could severely impact the community association’s ability to maintain the neighborhood’s function and appearance. A loss of money due to a crime can significantly affect maintenance, utilities, and upkeep.
Identifying Common Risks Faced by Community Associations
Crime can occur by employees, residents, or random people. For example, embezzlement and fraud can happen from the inside. Theft and misappropriation of funds can also occur by employees or residents. Cybercrime is on the rise, and many thefts happen virtually and can be difficult to detect.
Crime insurance can protect community associations from a variety of incidents:
- Theft: When someone steals money or property from the property
- Fraud: Cybercrime and computer crime, where a criminal takes money or assets digitally
- Employee dishonesty: When an employee commits theft, embezzlement, or fraud
- Robbery or burglary: When a criminal forcibly walks in and takes money or other property
Crime insurance is essential to an insurance plan, so community associations can prepare for the worst.
Tailoring Crime Insurance to Community Association Needs
Not all community association boards are alike, which means not all crime insurance policies are alike. Collaboration with the community association boards is critical to assessing the specific risks they face.
There may be areas where they are particularly vulnerable, which the policy should address. Determining coverage limits and deductibles is also essential to determining the crime insurance policy.
Intersection of Crime Insurance and Risk Management
When it comes to risk management, crime insurance is crucial. It helps manage the risk associated with various crimes. Staying proactive in preventing crime but being protected if it happens is one of the best ways to prevent large financial losses.
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.