An experienced community association management company can handle many of the insurance claims filed by a homeowners association (HOA). Typical insurance claims include storm, hurricane, water, fire, and smoke damage. Community associations can also file claims for broken heaters, water lines, sprinklers, and damage to roofs and common areas.
Understanding Homeowners Association Insurance Claims
Community associations like HOAs require insurance policies to protect them from different incidents, including natural disasters, fires, accidents, and thefts. A community association management company can help the HOA file for insurance claims in case of a covered incident. HOA insurance is a commercial property insurance that covers structural damage to buildings and common spaces managed by the association. The insurance can also cover liability expenses.
HOA insurance is commonly referred to as the master policy, as it covers the general requirements of the association. The master policy can cover the cost of repair after an earthquake causes damage to the community clubhouse. HOA insurance can also cover legal expenses if someone slips and files a lawsuit against the association. The insurance covers property damage and liability that the association would otherwise pay for out of pocket.
Types of Homeowners Association Insurance Policies and Claims
Community association managers can handle all insurance claims covered in the HOA’s insurance policy. HOAs need various types of insurance policies to protect their property, tenants, and employees. The extent and specifics of each coverage type depend on the policy writings and vary according to the insurance provider. Below are three standard HOA insurance policies and the claims they cover:
1. Property Value and Replacement Cost
HOA property value and replacement cost insurance can pay for replacing the building. This insurance typically features three main parts: contingent liability, demolition, and increased construction cost. These policies cover the cost of demolishing and replacing a damaged HOA building, including any upgrades required by local ordinances.
2. Directors and Officers (D&O) Liability
D&O liability insurance protects the HOA’s board of directors from lawsuits against them. The policy can pay for legal defense expenses, errors and omissions, liability claims, and indemnity. D&O liability claims include monetary and non-monetary forms, such as governing document violations, discrimination, libel or slander, and breach of contract.
3. Workers’ Compensation and Employee Dishonesty
HOAs can have employees working part-time, full-time, or on a contractual basis. Workers’ compensation insurance protects the association from lawsuits filed by its employees. The coverage can pay for injuries that an employee suffers while working. Employee dishonesty insurance covers theft and property damage caused by HOA employees.
Other HOA Insurance Policies and Claims
HOA insurance policies can cover discrimination claims stemming from foreclosures and other incidents. The association can purchase commercial general liability insurance for third-party liabilities like slip and fall claims. Since HOA insurance has limits, the association can also buy commercial umbrella policies to extend coverage and prevent out-of-pocket payments. Other policies include bare walls and all-in condo insurance coverage. A professional community association management firm can advise you on which insurance policies may be valuable for your community association.
HOA Insurance vs. Homeowners Insurance
Community association managers focus on handling homeowners association insurance claims. HOA insurance is different from homeowners insurance, which is a personal coverage every property owner should purchase. The HOA or condo association is not directly responsible for a personal unit and its items. Some condo insurance policies offer all-in coverage, which includes bare walls and some installed fixtures like countertops and appliances.
Homeowners and condo tenants must purchase custom insurance policies to protect their homes. Handling individual homeowner insurance is not typically part of the community management firm’s responsibility. Such arrangements are made separately between the homeowner and their insurance company. The HOA only features bylaws requiring homeowners to get adequate insurance.
How Community Association Management Firms Can Help
Community management teams offer advice, guidance, and specialized services to help the association meet its insurance goals. They can provide relevant insurance advice or purchase insurance policies on behalf of the homeowners association. The managers can also handle insurance claims when incidents requiring coverage arise. If someone slips at the community pool and files a lawsuit, the manager can handle such claims. Community managers generally obtain policies and liaise with the insurance provider during claims. The managers only handle claims filed against the association. Contact an experienced community management company today for help addressing your HOA’s insurance needs.