Individuals have all kinds of insurance: health, homeowners or renters, car, life, disability, the list goes on. All of these policies are put in place to provide protection and help offset costs in the event of an emergency. The HOA should have the same type of protections. That means having adequate insurance coverage to handle whatever comes along – and keeping it up to date.

There are several different types of insurance an HOA may have including:

  • Property insurance
  • Liability insurance
  • Fidelity insurance
  • Directors and officers liability insurance

Many HOAs have policies in place, but when was the last time they actually checked to see what policies cover and if they’re still effective for the current state of the association? Your HOA should review its insurance coverage annually and make adjustments as necessary.

If policies are not up to date – or do not fit with the association’s needs – homeowners may be asked to pay up to help cover expenses, or the HOA could end up taking on debt. For instance, if a major storm rolls through, does the current property policy account for all of the HOA’s assets and potential cost of repairs? What if someone gets hurt on the property? Is there a policy to cover a potential lawsuit or the cost of their care?

Here are a few things to keep in mind:

  • Carefully read through the governing documents and see whether there are requirements regarding minimum insurance coverage or the types of insurance needed.
  • Talk to a professional to review current insurance plans and understand exactly what is covered. Determine whether changes are needed to provide more comprehensive or extensive coverage.
  • Shop around to find the best cost for policies that meet the HOA’s needs. Oftentimes associations can get a bundled or comprehensive package. Remember that the most – or least – expensive options are not always the best choice. Consider everything that is included.
  • Budget accordingly so that the HOA can be properly protected and reduce future risk, at least from a financial standpoint.

Just as homeowners don’t want to lapse on their insurance coverage – or find out too late that what they have isn’t enough – the same goes for the HOA. Be proactive and make it a point to regularly review policies and pay attention to any changes the provider may enact regarding coverage or requirements. Understanding insurance policies and needs can be confusing, but partnering with a property management company like Kuester can make navigating these processes a little easier.

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