HOA Insurance: Is Your Coverage Sufficient?

Insurance brokers are one of an HOA’s most important vendors, yet they are often ignored until claims arise. This mistake can be costly.
Insurance is a contract in which the insurer accepts a fee (“premium”) and in return agrees to pay for certain incidents of damage (property insurance) or claims of liability (casualty insurance). Because insurance is a contract, it is critical to understand the contract’s limitations. Here are six questions to carefully consider. 

  1. Is there a deductible, and how much is it? The insured HOA must pay the deductible before the insurance company pays the first dollar of damage reimbursement. Also, what are the limits of the insurance? Is there enough insurance to cover the amount of the damage? 
  2. What are the exclusions in the insurance contract, where the insurer states that it will not pay for certain damage incidents? Mold, mildew, or dry rot damage are commonly excluded. It is important to understand the exclusions, as there is contractually no insurance for the items excluded from the insurance policy.

Thanks to Kelly G. Richardson, Esq, Richardson Ober DeNichilo, for providing information on this subject.

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