Rising premium costs will have many associations looking for any way possible to save money on insurance and balance their budgets. That said, dropping insurance coverage is not a good way to go about saving money. Let’s talk about the things you absolutely should not forgo in an attempt to cut HOA costs.
Your association should hold both general liability property and regular liability insurance. General liability property insurance covers the buildings themselves. This is the most important insurance any HOA will carry, and the one that will incur the most expense.
Regular liability insurance, on the other hand, covers things like injuries that take place on the property. If your association has a public space like a club room that is available for events, you may also need to have social host liability insurance. If your HOA does not allow alcohol to be served in your public spaces, you might be able to avoid the social host liability. You should discuss the specifics with your insurance representative to be sure.
D&O coverage should be held by all associations. Short for directors and officers coverage, this type of insurance is specifically designed to protect volunteer directors and officers of associations from any suit filed against the association. This prevents your officers from being held personally liable for HOA business.
Workers’ compensation coverage is also a necessity if your HOA employs anyone on your property. Additionally, it’s advisable to have this type of insurance to cover any contractors doing work on the property. They could claim employee status for insurance purposes in the event of an accident or injury. It’s definitely better to already have workers’ compensation coverage than to have an injury claim and have to fight it.
The types of coverage an association should hold are very different from a standard homeowner’s insurance policy. The goal is to protect the HOA as a business as well as cover individuals who are decision makers on behalf of the association. The best way to choose specific coverages for your association is to talk with your insurance representative. Go over all the details of your association with them and explain how you operate. .If you don’t already have an attorney on retainer to be present and weigh in on insurance issues, you should. We can help with that – just give us a call.