Generally speaking, insurance is confusing enough on an individual or family level; throwing in the curveball of homeowners association coverage might seem at first like a recipe for needless complication. The reality, though, is that while there is a lot of misinformation out there about exactly what homeowners association insurance covers, it is ultimately essential, and something any HOA should seriously look into. Here are a few quick tips for making the purchase of HOA insurance as simple and safe as possible.
1. For starters, you should conduct some research into different companies before you actually buy anything. This may seem like common sense, but it warrants special mention because, with homeowners association insurance in particular, there can be wide variances between loss ratios and premiums, and you’ll want to make sure you’re fully informed about your options before you make any kind of commitment.
2. Try to shop around for an independent agent who has knowledge of and experience with Homeowners Association insurance. Know also that many of the larger companies—such as State Farm, to name just one—offer packages that are designed with Homeowners Associations in mind.
3. Familiarize yourself with the policy you are considering, and ensure that it has fire and hazard protection; directors and officers liability; employee dishonesty and general liability protection. These are some of the most fundamental elements of HOA insurance, and should be considered as a bare minimum.
4. Ask your insurance agent about other kinds of coverage—like earthquake protection. Obviously, this is something that will come in handy in some areas but would be foolish and unnecessary in others. Your agent can help you make a discerning decision in this regard.
5. Work with your agent to determine a good premium; again, the agent should provide some wise counsel in this area.
6. This is crucial: Make sure your residents know what is and is not covered under the HOA plan. Explain to them, in particular, that their personal belongings will not be covered—and encourage (or even require) them to carry their own homeowners association insurance.