Homeowners Associations (HOAs) play a crucial role in the safeguarding and maintenance of common community properties and the efficient running of residential communities. But with responsibility comes risk. From lawsuits to property destruction, HOAs encounter several legal and financial obstacles.
This is why it’s important to protect your association with a tailored homeowners association insurance policy that meets both your community’s needs and California’s legal requirements.
Understanding HOA Insurance
HOA insurance is a policy created to protect the unique risks faced by associations that oversee common areas like clubhouses, pools, parks, walkways, and even the buildings themselves in condo communities.
Individual homeowners insurance protects personal property and liability; HOA insurance shields the association. General liability, insurance for common area property, Directors and Officers (D&O) coverage, and other similar coverages (based on your association’s particular requirements) are just a few of the typical coverages under an HOA policy.
Why Tailored Coverage Matters
No two HOAs are alike. A community with high-rise condos will have different insurance requirements than one with single-family homes and private roads. Here’s why customizing your policy is essential:
- Compliance with California Civil Code: California law requires HOAs to carry certain minimum types and amounts of insurance. For example, the Davis-Stirling Act outlines insurance disclosure obligations and recommends specific coverages. Working with an insurance provider familiar with state laws helps ensure that your policy aligns with these requirements.
- Coverage Gaps Can Be Costly: Coverage gaps in a ‘cookie cutter’ policy can be expensive. Custom coverage can assist in mitigating specific risks, such as earthquake exposure, flood zones or special amenities.
- Protecting Board Members and Volunteers: Some of the board members of the organization are volunteers, and personal protection from liability is essential. D&O insurance is frequently added as rider coverage to protect costs associated with decisions made within the scope of authority for officials.
Common Coverages Included in Tailored HOA Policies
While each policy should be crafted based on your community’s needs, here are common components of homeowners association insurance in California:
- General Liability Insurance: It is for bodily injury or property damage occurring in shared areas.
- Property Insurance: It covers damage to shared structures and common elements.
- Directors and Officers (D&O) Liability: It protects board members from legal claims related to their governance decisions.
- Fidelity/Crime Coverage: It protects association funds from theft or fraud by employees or board members.
- Workers’ Compensation: It is required if the HOA employs staff or contractors directly.
- Umbrella Liability: It offers additional protection beyond the limits of basic liability coverage.
Staying Compliant in California
For those in California, it is not just prudent, but many times mandatory for their HOA to have insurance coverage. The state does not specify certain levels of coverage, but it does require associations each year to reveal to homeowners the insurance they have and suggest levels of protection. Partnering with a licensed insurance provider who is well-versed in California HOA laws is very important in staying current and keeping your association protected.
How e360 Insurance Services can Help
When it comes to helping managers and board members find solutions for HOA insurance coverage, e360 Insurance Services offers solutions that fit and comply with California legal mandates and your community’s unique requirements. We partner with HOA boards to help them understand and quantify their risks, uncover gaps in their coverage, and tailor a policy that provides peace of mind at an affordable price.
Protect your community. Partner with e360 Insurance Services to find the right homeowners association insurance coverage for your HOA.