What to look for in D&O insurance...

SteveW13,

Each State may have different minimum levels of insurance contained within their HOA and/or Corporate laws. Since California is covered under the davis-stirling act, I went to Davis-Stirling.com and looked under Insurance.

Per their web-page at:

http://www.davis-stirling.com/MainIndex/RequiredInsuranceLevels/tabid/3093/Default.aspx#axzz1UGg7MLqo

the minimum level of D&O insurance will depend on the number of lots you have in your Association. As I read the page, you will need $500,000 if you have less than 100 lots. If you have more than 100 lots you will need 1 million dollar policy. If your Association likes to file legal actions against the board, you might want to consider higher amounts.

You should get multiple bids before settling on an insurance company. You may want to try an independent insurance agent who represents more then one company.

Tim

Our documentation dictates the amount of insurance the HOA must carry and our contractors. Make sure to review your documents for references to the minimum amount your HOA must carry. I didn't see what common elements you have to cover. We had a clubhouse with a pool. It's good to know the value of the clubhouse if you have one to know how much it would cost to replace it. That's just good advice for other common elements as well.

We used Traveller's insurance. The premimiums were worked out that we paid in monthly installments for 10 months of the year. There was no way we could afford to pay the insurance 1 lump sum. So you may want to work out a payment plan that will fit the HOA's budget.

If you don't have any common elements, then make sure the BOD members are covered for personal liablity. That way members will feel safer running for a board position if they don't think their personal accounts are at risk. A benefit for being on the board for some.

I will stress that some HOA insurance plans are "packaged" deals. We had insurance coverage for a HOA vehicle. We didn't own a HOA vehicle nor would we ever. However, the insurance company said we couldn't remove that option. So what it did do is IF a BOD member had an accident while doing HOA business it would cover the difference between what the member loss and accident costs. A good thing to have.

There are not alot of insurance companies out there willing to cover HOA's. I heard there was less than 20 nationwide. So you may not be able to get alot of bids but should be able to get a good 3.