As a homeowner, you’ll likely have an insurance policy that covers casualty loss, and most likely a comprehensive general liability policy. But if you belong to a homeowners association, you may be wondering if the HOA needs its own policies of insurance and, if so, what insurance should be purchased. You should also be concerned about having sufficient coverage for your own losses that may not be covered and that your neighbors have insurance to cover losses that may occur as a result of their actions which affect your property.
Why You Want Your HOA to Have Insurance Coverage
Though it may be hard to believe, many statistics show that only about half of the members of most homeowners’ associations actually have their own policies of insurance. Furthermore, many who do have insurance don’t actually have enough to cover their losses. If one of your neighbors is sued because of a slip and fall, leaking pipes or other accident, and either has no insurance or has inadequate insurance, you can expect that the HOA will also be a defendant in a lawsuit. If you are affected by a loss or damage caused by common property (such as leaking pipes in the walls) or due to the actions of your neighbor, you must ensure that you have sufficient coverage as well.
What Insurance Does Your HOA Need?
Your homeowners’ association should have a number of different types of coverage, including:
- Property and casualty insurance — This covers damage to structures, buildings and other types of property and can cover against theft or vandalism, fire, storms and other natural disasters.
- Comprehensive general liability insurance — This type of insurance applies when someone claims to have suffered an injury on HOA property.
- Directors and officers liability insurance — This covers directors, officers and trustees of the HOA for most acts performed in the course of their duties.
- Workers’ compensation insurance — covers benefits if an employee is injured on the job.
- Fidelity insurance — This type of insurance provides reimbursement for theft from an HOA by employees, volunteers and others.
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