Home Owners Associations (HOAs) are responsible for insurance that covers all public areas of a development. In contrast, each homeowner is responsible for insuring their home in the development.

Most HOAs provide coverage of common areas through a "master policy" that typically covers the parts of residential structures shared by all homeowners, such as club houses, lobbies, stairways, elevators, and basements. HOA governing documents spell out exactly which areas are covered.

Some states require that HOAs master policies cover the costs of lawsuits filed against homeowners by people who are injured or killed on the property from an accident in a shared area, such as an elevator malfunctions that injures someone. If the HOA lacks the right kind of liability coverage, homeowners might be responsible for very significant costs.

Home Owners Association employees are responsible for making important decisions regarding property management. When an HOA employee causes damage to someone, the HOA and the HOA employee could be sued. Many HOAs add additional coverage to protect the HOA and employees from having to pay lawsuit settlements due to employee errors or omissions.

Types of insurance often used by HOAs include:

    • Liability insurance protects HOAs from any acts of “negligence” that may inadvertently be committed. A good liability policy will cover the damages if negligence is proved and the costs of the association’s legal defense. Many HOAs carry liability coverage in the amount of at least $1 Million per occurrence.
    • Directors and Officers Liability Insurance (often called “D&O” insurance) is especially important for self-managed boards. HOA bylaws include an indemnity clause stating that the board of trustees or association officers shall be “held harmless” for most types of legal liability so the association is responsible for the legal defense fees of behalf of the board members. A D&O policy helps fund this requirement and covers errors made by board or committee members while acting on behalf of the association.
    • Fidelity Insurance protects the HOA from theft committed by an employee, contractor, and even association volunteers.

Contact Golden Global Insurance at 305-899-5125 for an expert review of your Home Owner Association’s insurance coverage. We can help your association develop an insurance policy that reduces risk for owners and the association at the lowest possible price.

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