HOA Insurance

Started by ParrisG • 15 replies • 503 views

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ParrisG (North Carolina)
Posts: 9

Posted:

We are an 83 home community 55+.
Have a clubhouse and pool.
What would be a typical cost for insurance including D&O?

TimB4 (Tennessee)
Posts: 21,059

Posted:

This varies by State, County and the legal history of the Association.

My previous board, in northern Virginia, was paying around $1,300 per year in 2018 (the last records I have access to).
This was with zero legal actions against the Association for 20+ years.

The best way to identify the market price for your area is to have multiple companies bid on the work (insurance, in this case).
If they are all around the same price, you are getting a fair market price for your area.

WendyM5 (North Carolina)
Posts: 1,522

Posted:

i'd guess over $2000 easy. Depends on the type of D&O insurance you want, some is really basic, others is more comprehensive.
also depends on the facility, if it has fences, etc.

vis ta vie

TimB4 (Tennessee)
Posts: 21,059

Posted:

I don't think the type of facility would enter into a D&O (Directors and Officers) policy.
They would enter into a liability policy.

TimB4 (Tennessee)
Posts: 21,059

Posted:

I would add that the type of insurance can be inclusive or exclusive of attorney fees.
Those that are inclusive are less expensive.

Inclusive means that the cost of the legal defense will come out of the policy limits.
For example, you have a one million dollar inclusive policy. Legal costs are $500,000 but you lose and the opposing party is awarded $1 million.
In that example, the policy would pay $500,000 and the Association would have to come up with the other $500,000. This is because the legal costs were 1/2 the policy limit.

Exclusive means the cost of the legal defense will be in addition to the policy limit.
Using the example above - the policy would pay the full $1 million dollar award.

For my previous Association, we had three policies:

D&O - cost of $1,300
General Liability (inclusive) - cost $1,200 (not a lot of amenities in our development)
Crime (served as our Fidelity Bond) - cost $400

Hope this helps,

Tim

CathyA3 (Ohio)
Posts: 6,299

Posted:

It may not matter to D&O insurance if you're an HOA or a condo, but it will matter to other types of insurance because individual condo owners only have to cover what's inside their four walls (the association insures the rest of the property).

We're currently paying over $26,000 per year for a 74-unit condo property, with no amenities other than a decorative wall and a bit of landscaping at the entrance. This includes coverage for casualty/property damage, liability if someone is injured on the property, fidelity/employee dishonesty coverage (protects our financial assets, D&O, and umbrella coverage. Our CC&Rs require this coverage, including a minimum for the fidelity insurance that is based on the amount of money under association control. Our policy is all-included, which means in the event of something like a fire, portions of individual units will also be repaired (other condos' insurance policies won't necessarily cover this and will be cheaper).

Our deductible is $10,000 and we've had no major claims. We will usually pay out of pocket if an insurable loss is close the deductible amount, since numerous small claims can really increase premiums or even make a community uninsurable.

Insurance is the third-largest component of our budget after exterior maintenance and reserve contributions.

Our premium has risen by over $4,000 in the last two years. This is a nation-wide trend - a major factor is the increase in damage due to extreme weather. Another factor is the increasing unpredictability of the weather (saw an interesting article a while back that said Tornado Alley is moving around, and areas that weren't flood prone in the past now are). Insurers don't like this since it's harder to assess risk.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

We had to have a 1 million dollar policy per our rules. That is usually "standard". HOA insurance is different than your home insurance. Meaning it is often offered in "Bundles". It's not always a pick and choose what you want. Example: We had to have car insurance for a HOA vehicle we did not even own. However, if a board member was to have an accident while doing HOA duties, this insurance would help with any of the differences between personal insurance. I felt not necessary but it was part of the "bundle". Just to aware of some of the things may run across when getting insurance.

Ours was roughly $2300 a month for 10 months. Which is another option you may need to look into. The time paying. Will be paying the premium monthly for 12 months or every 6 months? We had a special deal with our insurance for 10 months. Otherwise we could not afford the premium at the rate it was set at. We collected only $5K a month so a $2300 bill was a majority of our budget for 10 months of the year.

It should be noted that because it says "1 Million" does NOT mean it pays out 1 Million dollars. That is kind of a misnomer. After legal costs etc... the payout may be less than $100K. Any higher then the owners/members have to pay the difference.

Making a higher deductible does help. However, be aware if you make a $20K deductible one day a real repair may come across where the HOA will have to raise that $20K. Is it prepared to have one that high or lower?

Really need to shop around for insurance to see what is offered out there. Good luck!

Former HOA President

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MelissaP1 on 03/27/2023 7:37 AM
We had to have a 1 million dollar policy per our rules. That is usually "standard". HOA insurance is different than your home insurance. Meaning it is often offered in "Bundles". It's not always a pick and choose what you want. Example: We had to have car insurance for a HOA vehicle we did not even own. However, if a board member was to have an accident while doing HOA duties, this insurance would help with any of the differences between personal insurance. I felt not necessary but it was part of the "bundle". Just to aware of some of the things may run across when getting insurance.

Ours was roughly $2300 a month for 10 months. Which is another option you may need to look into. The time paying. Will be paying the premium monthly for 12 months or every 6 months? We had a special deal with our insurance for 10 months. Otherwise we could not afford the premium at the rate it was set at. We collected only $5K a month so a $2300 bill was a majority of our budget for 10 months of the year.

It should be noted that because it says "1 Million" does NOT mean it pays out 1 Million dollars. That is kind of a misnomer. After legal costs etc... the payout may be less than $100K. Any higher then the owners/members have to pay the difference.

Making a higher deductible does help. However, be aware if you make a $20K deductible one day a real repair may come across where the HOA will have to raise that $20K. Is it prepared to have one that high or lower?

Really need to shop around for insurance to see what is offered out there. Good luck!

MaxB4
Posts: 3,513

Posted:

Quote:

Posted By MaxB4 on 03/27/2023 9:28 AM

D&O insurance DOES NOT cover a Board member if they have an accident, workers comp does.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

I didn't mention D&O insurance or about board member coverage. I talked about a hypothetical car accident since the HOA did not own a vehicle but had HOA vehicle coverage. It was part of our "bundle" deal. When I asked to remove it they told me it was for in case a board member had a car accident this may be something they can claim with the HOA. Otherwise that coverage was utterly useless to have.

There are many items your insurance covers besides board members. Which some HOA's do not have that included and should.

Former HOA President

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Our association is 40 side by side duplexes, 32 one and two story stand alone homes so 112 members. We have little common area and no amenities. Our Liability and D&O is about $1,400.00 per year. We have never had an insurance claim.

NormanK2 (Florida)
Posts: 39

Posted:

We moved into an HOA park here in fl. we have about 120 homes i don't think we have HOA insurance i have never heard it talked about at any meeting are all Hoa suppose to have it.

MelissaP1 (Alabama)
Posts: 13,836

Posted:

It is recommended to have D&O insurance for those who are on the board. That protects them personally. Other insurance needs vary on what common areas your HOA may have. Some HOA's don't have common area except for a welcome sign. Other HOA's have clubhouses, swimming pools, and roof/building coverages. Find out what your HOA may need per it's situation.

Note the HOA insurance is NOT your personal insurance. There are incidents where they may cross but the first call isn't to the HOA to make a claim. Your insurance will contact the HOA's insurance if there is a responsibility.

Former HOA President

WendyM5 (North Carolina)
Posts: 1,522

Posted:

having a pool will dramatically incrase insurance costs from what I have heard.

I got several quotes from state farm, and 2 other companies. none of them recommended anything over 1 million which was what was recommended 28 years ago, which I thought was dumb, so we increased it to 2 million for a think $250 more.

They all said that the front entrance was over insured at $28,000. Real value $9000.
And the previous boards never bothered to insure our playground or picnic shelter.

Basically I potentially saved my HOA's ass by looking over the insurance which apparently was never done in the past 25 years.

vis ta vie

LoriM15 (Florida)
Posts: 1,009

Posted:

Quote:

Posted By NormanK2 on 04/11/2023 1:47 AM
We moved into an HOA park here in fl. we have about 120 homes i don't think we have HOA insurance i have never heard it talked about at any meeting are all Hoa suppose to have it.

Are you on the board? If you don't have D&O insurance, you're crazy to serve on the board.

FS 720 requires a fidelity bond for anyone who handles the association funds. But usually HOAs have liability insurance also. It's probably mandated in your governing documents. I'll bet you do have it. Check the budget to see if there's a line item for insurance.

CathyA3 (Ohio)
Posts: 6,299

Posted:

Quote:

Posted By WendyM5 on 04/11/2023 5:30 AM

I got several quotes from state farm, and 2 other companies. none of them recommended anything over 1 million which was what was recommended 28 years ago, which I thought was dumb, so we increased it to 2 million for a think $250 more.

Our insurance agent agrees with you. He said that million dollar settlements are not uncommon and should be viewed as the bare minimum in coverage (that was five years ago). We're also at $2 million, and we have umbrella coverage as well.

People think that HOAs/COAs have deep pockets, so they're attractive targets for litigious types.

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