Common Area Insurance Necessity

Hello to All,

I've been charged with researching existing insurance coverage throughout our townhome community. We've got the typical D & O coverage for $1M and general liability - good. Questions of concern relate to the necessity of property coverage on a shed and pool pumphouse. I'm not well versed in insurance, but personally feel the premium savings are not worth the risk to dipping into our reserves should something happen. (Reserves are a segregated "pooled" account not officially established as reserves by previous BODs so no real schedule/ calculation!) The opposing opinion is that the risk is worth the savings. Can the seasoned HOA Talk readers advise of pro and con ideas so I may facilitate an intelligent dicussion at the next meeting?

Additionally, there is FEMA flood insurance on the common structures (e.g. shed, clubhouse) and members have proposed this is not necessary due to the high elevation. These elevations are the highest in the entire neighborhood, so realistically, by the time the shed and clubhouse were flooded, there would be nary a neighborhood house left to use it! (The aging clubhouse gets used only twice a year already, so why replace it?) I can see how having this insurance may not be necessary, but are there strong points to keeping it that anyone can make?

Thanks for any insight in advance!

Thank you for the response, GlenL. The bylaws require that the duty of the BOD is to:
-"Procure and maintain adequate liability and hazard insurance on property owned by the association;"
-"Cause all officers or employees having fiscal responsibilities to be bonded, as it may deem appropriate."

My review of FL Statutes 720 for HOAs state no requirement.

We've got the hazard and D&O covered. "Adequate liability" is so generalized - does this put us in a pickle if we were to remove property/flood coverage from a shed and pool pumphouse?

Apologize for my ignorance. Of course I've consulted with our insurance agent, but i'm looking for objective and educated experience/views, as the agent may be biased in their advice at times.

Thanks again!