An HOA (Homeowners Association) should typically have several types of insurance coverage to protect both the association and its members. Here are some common insurance policies an HOA should consider:
Property Insurance: This policy covers damage to the common areas and structures owned by the HOA, such as the clubhouse, pool, common grounds, and buildings. It should include coverage for perils like fire, vandalism, and natural disasters.
Liability Insurance: Liability coverage protects the HOA in the event that someone is injured on the common areas or as a result of the association's negligence. It can help cover medical expenses, legal costs, and potential settlements.
Directors and Officers (D&O) Insurance: D&O insurance protects the board members and officers of the HOA from personal liability for their decisions and actions while serving in their roles. It can cover legal expenses in case of lawsuits or allegations of mismanagement or breach of fiduciary duty.
Umbrella Insurance: An umbrella policy provides additional liability coverage beyond the limits of the primary liability insurance. It offers broader protection in case of significant claims that exceed the underlying policies' limits.
Workers' Compensation Insurance: If the HOA has employees, workers' compensation insurance is necessary to cover medical expenses and lost wages in case of work-related injuries or illnesses suffered by employees.
Fidelity Bond/Crime Insurance: This coverage protects against losses resulting from fraudulent acts committed by employees, board members, or others who have access to the association's funds. It can cover theft, embezzlement, or other financial misconduct.
Equipment and Machinery Insurance: If the HOA owns equipment or machinery, such as maintenance tools, lawn mowers, or pool equipment, it is important to have coverage for potential damage, loss, or breakdowns.
It's important for the HOA to consult with an insurance professional who specializes in community associations to ensure that the coverage adequately addresses the unique risks and needs of the association. The specific insurance requirements may vary based on the location, size, and nature of the HOA and should be determined in consultation with an insurance expert.