To those who don't know much about the subject, insurance for condos and HOAs can seem like a fairly simple thing—like car insurance, or life insurance. It's tempting to just trust their broker or agent, and leave it at that.
There's much more to protecting an association from risk than meets the eye, however. Homeowners associations are complex entities, and as such, their coverage needs are multifaceted. There's insurance for the common areas such as the hallways and lobbies, insurance for the mechanical systems, boilers, elevators and the like. There's fidelity bond coverage for employees, and—especially nowadays—flood and earthquake coverage.
Of course, the insurance industry is heavily regulated—including companies who offer coverage for condos, co-ops and HOAsvand those regulations and various pieces of governing legislation are changing all the time. That's why board members and managers should make a special effort to keep up with new developments in insurance.
New World, New Rules?
The insurance industry has borne witness to many changes in the past five to 10 years. One of these, certainly, involves terrorism insurance, something that wasn't thought of much before 9/11.
However, says Dan Corbin, director of research for the Professional Insurance Agents of New Jersey (PIANJ), "Unit owners' policies (called HO-6 policies) have not changed much over the past 10 years, except to the extent that they have been updated along with other types of homeowners' policies. There is also attention being given to insuring property for flood damage, and the increased costs to replace structures according to current building codes."