An aspect of HOA management that can often get overlooked is insurance.
Every HOA needs insurance coverage, and there’s a wide variety of plans to choose from and decision to make on behalf of the community. As a board member, thoroughly understanding what your community needs is the first step in choosing different insurance plans for the neighborhood. Boards also need to consider what kind of plans should be introduced in order to fully protect the association itself. This process should be taken seriously, mostly due in part because plans can become quite expensive!
The five keys plans your board should explore are as follows:
- Property insurance, which shields your associations common property from catastrophes and/or other covered perils.
- General Liability insurance protects the association if they become legally obligated to pay because of bodily injury, property damage or personal injury arising out of the association’s activities.
- Directors & Officers liability insurance. This form of insurance protects the trustees and officers (that’s you!) from being held accountable for the actions they took or didn’t take as members of the board.
- Fidelity insurance protects your HOA from a theft committed by Association members themselves or anyone else hired out by the board.
- Workers’ Compensation. This covers any individual (That’s also you!) who volunteers to work for the homeowners association.
It’s crucial to learn about all the different types of homeowners insurance and it’s even more important for your board to get covered. If you’re not properly covered, you’ll run the risk of opening your board up to liability and lawsuits. We recommend taking the safer route in this journey and making sure your covered for every type of situation, because we can almost guarantee your HOA will face some kind of issue in the future.