Just like your condo association or homeowner association has to pay its taxes, it also has to pay for its insurance coverage. But managing risk coverage for an entire community is a little more complicated than insuring your family car.
Meeting Your Needs
Co-ops, condos and HOAs all have different insurance needs, and the price of your particular community's policy can vary with the size and market value of the property owned by the association—meaning the common areas, and the extent of liability exposure, such as pools and golf courses. Also, there are any number of carriers and any number of additional, specialty riders and add-ons you can choose from.
A good broker or agent—not to mention a knowledgeable board or manager—can make sense of it all. It also helps to have knowledgeable people on the board in a decision-making capacity. In some developments, responsibility for purchasing insurance may be delegated to a small subcommittee or even one person, but the general feeling in both HOAs and the insurance industry is that more heads are better than one.
What is the minimum of coverage an HOA should carry? Debbie Pasquariello of Boyarin Hourigan Blundell Insurance in Toms River, a community association insurer, says that bare minimum coverage requirements are outlined in an association's governing documents. The association, however, can always opt to purchase more comprehensive coverage.
A homeowners association that is not a condominium does not need property coverage (exclusive of a clubhouse), just liability, believes insurance broker and consultant, Edgar A. King of E.A. King Insurance in Allenhurst. "The liability limits should be at least $1 million, and I would strongly suggest they have an umbrella policy over that for another $1 million," he says.