HOA Insurance

Hi All,

Continuing to post about my new community/HOA.

The community has a lodge with meeting rooms, open areas, kitchen, pool, sports courts, 17 detention ponds, sidewalks, gates, etc ... pretty complex.

We have three types of insurance - in general what is usually expected.

- liability/crime add-on
- property damage
- D&O

Does this sound about normal - anything I'm missing? (I'm digging into coverage factors now, with goal of getting bids for the next cycle - it's been about 6-7 years since last bid cycle)

Depending on the situation, Workers Compensation insurance may be advisable. You should consult with your agent.

We have recommended WC to HOA clients which have an especially active membership. For example, one client association has a Decorations Committee which set out association owned seasonal decorations. Should a committee member be injured in the process simply by accident (fall off a curb, mashed fingers with a hammer, injured setting up tables in the community room, etc.) the WC will both provide coverage to the person involved and protect the association. Another scenario would be an injury sustained as a member of a Landscape Committee while in the process of conducting a community review.

Insurance for an Association is a very expensive Operating cost, with costs increasing each year. Please check your insurance section in your Declaration as to what your master insurance has to cover and what the owner is responsible for. In the state of Minnesota there is an insurance law that explains what an Association has to cover, what it may cover and what it does not cover. Then the Board needs to determine the level of coverage that is available that the Board is to pay for. We raised the homeowner deductible to $20,000.

There's something known as "umbrella" coverage that we have that's supposed to fill in any gaps for various things. Like auto insurance which covers directors and officers when they're using their own vehicles on association business. There's also no-employee workman's comp which also kicks in if you accidentally run into a situation where a vendor, let's say, provides an employee who, for whatever reason, isn't actually covered under the vendor's workman's comp policy. It's not supposed to happen, but that's why there's insurance available for it. A no-employee WC policy can save your butt and it's not all that expensive. Sorry, don't have handy numbers.

We've had both "fidelity bonds" for D&O and "crime insurance". The latter was described to us by our agent as "better" than a fidelity bond. There is a difference, but I couldn't tell you what it is. Our crime insurance covers up to an amount equal to all of our bank account balances (operational and reserves) plus a few months' worth of operating expenses. You might want to explore whether your policy covers you for your OWN people's criminal/theft only, or if it includes amounts that might be appropriated/stolen by your management company's employees. Theoretically they should carry their own policy for that.

And not directly related to insurance, maybe review whatever indemnity clauses are in your documents. They can get tricky and should be reviewed and updated as necessary every few years.