The advantage of an umbrella policy is that it can offer you significantly higher limits so that the HOA is at a far lower risk of ever exceeding its policy limits.įor instance, Distinguished’s Umbrella insurance policy for HOAs offers limits as high as $5 million. Umbrella insurance offers an extra layer of protection for HOAs as it writes over other existing policies like D&O. In California, the Davis-Stirling Act statute protects owners from individual liability, provided the HOA maintains at least minimum levels of insurance as follows: $2 million for associations with 100 or fewer separate interests and $3 million for associations with more than 100 separate interests. It’s also necessary to consider any applicable local laws. Having a high enough coverage limit is crucial because unit owners can be affected when the suit forces their HOA to pay out beyond what its coverage can handle. Damage to a private car caused by HOA property.Some potential exposures a GL policy would cover include: Specifically, a GL policy provides coverage in the event of an injury or accident in common HOA areas. General liability coverage shields the association from having to foot the bill for liability suits up to its coverage limit. So if a wall, fence, or even clubhouse needs to be replaced, your clients will be covered for the total cost of replacing them - no matter how much that is. With GRC, there’s no need to worry about estimates or inflation because your clients are always covered for the total replacement cost of those covered items. That way, if any damages occur, the HOA will be able to rebuild without putting itself in financial jeopardy.ĭistinguished’s coverage takes this a step further by offering the option of Guaranteed Replacement Cost (GRC) for “Other Property” (things like pools, sidewalks, signs, etc.). The HOA should be insured for at least the value of the common area buildings, like clubhouses and maintenance facilities. Here’s a breakdown of the main types of coverages most will need to be secure. HOAs need more than just property coverage and general liability to be fully insured. Which Coverages Should HOA Insurance Policies Include? It protects them from the costs of liability litigation, discrimination suits, or even employee theft, providing peace of mind to the people running HOAs. HOA insurance also covers the board of directors. Generally, this includes coverage for property damages, crime, and liability suits to common areas like: HOA insurance provides coverage to homeowners associations that aren’t protected by personal homeowner or condominium policies.
With this knowledge in hand, you can confidently sell HOA insurance, and HOAs can get the coverage they need to stay financially secure. This guide will bring you up to speed on the basics of HOA insurance: what it covers, which policies are needed, and how much this will all cost. Every HOA will also have different needs and legal requirements that you’ll have to consider when getting them the best possible policies. You need to understand the general provisions and features that underpin sound, comprehensive coverage. However, getting HOAs the right insurance isn’t easy. With all of these responsibilities and people involved, problems will arise - and when they do, they’ll need a good broker with the right HOA insurance policy in their corner. They’re comprised of dozens of families, include shared public amenities, and spend hundreds of thousands of dollars on renovations, repairs, and general operations each year.
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