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A homeowners association or HOA must have insurance just like individual homeowners. However, the insurance needs of an HOA are different from those of individual homeowners. Home HOA insurance covers the association for risks involved with property maintenance and liability matters in neighborhoods with a homeowners association. It's important to note that this insurance is not the same as regular homeowners insurance. Associations must ensure they are covered with the right home HOA insurance specific to an HOA's needs to keep everyone and their belongings protected. Below is a list of the top seven insurance coverages that your HOA should consider investing in to protect itself from any liabilities.
1. General Liability Property Insurance
Property insurance, also called general liability insurance, is necessary for any HOA that manages condos and co-ops to protect their buildings. These policies cover the structures themselves, not their contents, which are the responsibility of the condo owner or renter.
For instance, if a building is damaged by a fire or a storm, this coverage can help the association cover the repair costs.
2. Regular Liability Insurance
HOAs must be aware that their general liability policy does not cover injuries to visitors. It's their responsibility to add regular liability coverage to their HOA insurance policy, ensuring they are prepared for any unforeseen circumstances.
3. D & O Coverage
Liability coverage that explicitly covers the Directors and Officers of homeowners associations is a vital addition. This policy provides a safety net, protecting volunteer officers from liability in case of claims against the homeowners association, instilling confidence in their decision-making.
4. Social Host Liability Coverage
Some homeowners associations have clubhouses and social gatherings where members and guests can meet for planned events. Many HOAs even rent their facilities for weddings and special events. If alcohol is ever served on association grounds at any of these events, HOAs need liability coverage. For instance, if a guest becomes intoxicated and causes damage to the property or injures someone, this coverage can protect the association. If the HOA does not permit liquor serving on the grounds, this coverage may not be necessary.
5. Garagekeepers Coverage
An association with a garage where non-members are permitted to park must have garage keeper's insurance. This insurance protects the HOA and the vehicle owner against vehicle damage or theft while the guest is on the premises and parked in the association's garage.
6. Workers' Compensation and Employee Dishonesty Bonds
Like any other business, if an HOA has employees, workers' compensation insurance is necessary to avoid lawsuits should an employee be injured while on the job. These policies are also recommended for associations that pay contractors or freelancers. These individuals could claim employee status depending on the scope of the job they perform and if they are regular workers on association grounds. Overall, employee dishonesty bonds protect the association from dishonest employees' theft and damage to association property.
7. Discrimination Claims Coverage
Discrimination claims coverage is a must for associations so foreclosing on residents who fail to keep up with their mortgages is possible. When facing foreclosure, many people look for any way to avoid losing their homes; one of those ways may be filing a discrimination claim. This vital home HOA insurance covers associations against this liability if they must foreclose a resident who claims they are being unfairly targeted for foreclosure due to their ethnicity. Discrimination coverage is becoming more critical for HOAs as foreclosure rates climb.
These coverages differ significantly from those provided by any standard homeowners insurance policy. Home HOA insurance aims to protect the association as a business and the people responsible for making decisions for the association.
To learn more about necessary home HOA insurance, homeowners associations should contact an experienced homeowners insurance company to help them determine the various types of coverage they may require.
Precedent Hospitality may have the right insurance company to help.
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