Are There Gaps In Your Association Insurance?
Insurance premiums, a large expense for associations, have been on the rise for the last several years. Analysts say the increases support balancing premium/claim ratios, partially due to the growing frequency of natural catastrophes. Today, it’s more important than ever to understand your options so that you can get the coverage you need without paying more than you should.
- Many HOA governing documents specify minimum coverage or provide insurance coverage guidelines. Take a copy of your CC&Rs when you meet with an insurance agent. This can help you identify owner vs. association responsibilities.
- Your property insurance coverage should be at least equal to the estimated replacement cost of the buildings and elements for which the association is responsible. Future costs are difficult to predict. If it has been several years since your Board has evaluated replacement cost, you could be a gap.
- Lawsuits due to safety issues and errors have grown rampant. Liability insurance that covers accidents and/or injuries on HOA property is a must. Like property insurance, homeowners need their own because liability insurance does not cover accidents within the unit walls.
- D&O (Directors and officers) insurance protects Board members from being held liable for unintentional mistakes. If you think your general liability insurance extends to Board members, this could be a gap. Protect your Board members who volunteer their time and effort to improve the community.
- Most associations understand that they need worker’s compensation insurance if they have employees. But, what if you don’t have employees? This can get tricky if you ever hire someone to do odd jobs, etc. who appears to be an employee. Talk to your insurance agent about your risks if you hire anyone who isn’t a licensed and bonded contractors.
Your Board members are probably not insurance experts, and association insurance complex elements. That’s why you need an insurance agent who is knowledgeable in HOA coverage. Experience is a big plus when you’re identifying gaps and mitigating risks in an association.
Policies change. Situations change. Needs change. Reviewing your insurance is more than just looking at the deductible. Assess your risks and requirements so that your association is covered without paying too much.
Wise Property Solutions is a property management company serving East Tennessee with offices in Knoxville, TN and the Tri-Cities, TN-VA. Specializing in Condominium Association Management, Home Owners Association Management, HOA Management and Gated Community Association Management.
Tri-Cities, TN-VA: 423-926-7373
Knoxville, TN: 865-643-8989