HOA insurance

Started by ParkerJ • 7 replies • 1410 views

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ParkerJ (Virginia)
Posts: 12

Posted:

I'm a new member here and also a new board member, and hoping for some common sense assistance. Our HOA is small, just 18 single family homes. 12 of the homes are on a private road the HOA is responsible for maintaining. There are no other common areas. My question: what HOA insurance coverage is reasoable? We have an agent that is quoting an annual policy of around $2500 that covers general liablility, director's and officer's liability, crime and umbrella. Our board is not convinced all that is necessary; as far as I can tell, Virginia law says we need only insurance to cover any malfeance by board members. We realize we need some coverage for the common road. Any suggestions? IS there a "norm" for HOA coverage for associations that don't have real common areas (pool, clubhouse etc)? Many thanks!

MelissaP1 (Alabama)
Posts: 13,836

Posted:

Most HOA insurance policies are "Package deals". You can't realy pick and choose your options. Like we had insurance for our "HOA" vehicle. We don't own a vehicle for our HOA. However, what that insurance did do is if a board member had an accident during their duties it could cover the difference between your personal insurance and the deductible. I wanted to get rid of it, but the insurance agency said it couldn't be done as it was a "package deal".

I don't see anything wrong with the amount your paying or what it is for. You may ask if you can divide up the payments if they are too much. We had to do that because there was no way we could afford to pay the amount unless we divided it up to smaller monthly payments. I would shop around a bit. There's not alot of HOA insurers out there so you may not get much difference in coverage. You do get what you pay for as well.

Former HOA President

TimB4 (Tennessee)
Posts: 21,059

Posted:

Parker,

I'm in VA and we carry the following:
General Liability $1 million
D&O
Crime (which serves as our fidelity bond).

We do not have a pool or clubhouse and our development is not that litigious. However, we do own the roads, sidewalks and two small playground. We chose not to have an umbrella policy and believe that the general liability will be enough.

Note, VA law, specifically § 55-514.2, specifies the minimum needed for the fidelity bond.

Our cost works out to be $2,665 per year.

ParkerJ (Virginia)
Posts: 12

Posted:

Melissa/TIm, thanks.

Tim, sounds like we have similiar setups, though I suspect we are much smaller (only 18 homes)? We were thinking of cancelling the umbrella as well...no a litigious association, and almost 25% of the membership is the BOD anyway. If we cancel the umbrella the annual would be just $2000. Not a huge number, but we are just 18 houses.

Know you are not an insurance salesman so hate to ask, but...in layman's terms, can you explain difference between D&O and crime? They both sound like they are the fidelity bond to protect against bad BOD actions.

thanks again.

TimB4 (Tennessee)
Posts: 21,059

Posted:

As I understand it (and greatly simplified),

D&O will cover expenses (minus deductible)if someone brings legal action against a member of the Board.

Crime will cover funds (minus deductible) that are stolen by a member of the Board, an Officer or an employee.

TimB4 (Tennessee)
Posts: 21,059

Posted:

Directors and officers liability insurance From Wikipedia

Crime insurance From Wikipedia

There are probably better explanations out there but, from what I saw, they were mainly written by Insurance companies trying to sell the insurance. Therefore, I didn't link to them. If your interested, just do an internet search.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I like to compare the difference to IF the HOA board member in their duties does something stupid. Let's say they forget or lose that month's dues collections. The HOA may make a claim to cover the cost of that loss. That would be the D&O portion. Now lets say that board member is so mad that they kick in the clubhouse door. That would be "Criminal". The HOA could then make claim to the vandalism of damaging the door.

It's kind of the difference of being stupid and doing something stupid....

Former HOA President

ParkerJ (Virginia)
Posts: 12

Posted:

again, thanks to you all. Very helpful. I"ve been googling overtime lately, but the answers/inputs on this board seem to be much more useful!

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