Condo associations are the backbone of shared‑property living, coordinating everything from policy enforcement to financial oversight. Considering that about 75 million Americans live in community associations, and there are more than 350,000 HOAs nationwide, for insurance agents, understanding how condo associations work is critical. Governance decisions carry legal and financial risks, and insurance can be the difference between stability and exposure.
Condo Association Governance, Responsibilities, and Risk
A condo association is run by an elected board of directors, often supported by committees, with homeowners as members. The board makes decisions, enforces rules, and manages funds.
Core condominium association responsibilities include:
- Preparing and managing budgets
- Maintaining common property
- Enforcing bylaws and covenants, conditions, and restrictions (CC&Rs)
- Resolving disputes among residents
Governing documents, like bylaws and CC&Rs, set the framework for day-to-day decisions, maintain consistency, and reduce conflict. Board members also have fiduciary duties to act in the community’s best interest. When those duties aren’t met — such as failing to enforce rules or mishandling funds — associations may face lawsuits, financial losses, or reputational damage.
Insurance Solutions for Condo Association Risk Management
Kevin Davis Insurance Services specializes in coverage designed for condo associations. Agents should understand the following policies when advising their clients:
- Directors and officers liability: Protects board members from claims related to decisions made in their official roles. Claims can stem from accusations of mismanagement, discrimination, or breach of fiduciary duty.
- Crime insurance: Covers losses from theft, fraud, or embezzlement of association funds.
- Cyber risk insurance: Helps mitigate losses from data breaches or cyberattacks targeting association records.
- Excess liability: Provides additional limits when claims exceed standard coverage.
Kevin Davis focuses on specialized liability products, not property or general liability, so agents should confirm that clients also carry those essential policies.
Why Governance and Insurance Go Hand in Hand
Good governance is about more than efficient meetings. It’s about protecting the community legally, financially, and reputationally.
Consider this scenario: A board delays critical roof repairs. The damage spreads to multiple units, and owners sue. Without directors and officers liability coverage, board members could face personal liability. Strong governance reduces the risk of disputes, but insurance provides a safety net when problems escalate. Condominium association responsibilities must be supported by sound insurance planning.
Strengthening Protection Through Expert Guidance
Insurance agents can help condo associations by identifying risks and recommending solutions. Encourage your clients to schedule a coverage review to ensure protection aligns with governance responsibilities. Reach out to Kevin Davis Insurance Services today to explore our full range of community association insurance options.
FAQ About Condo Associations
Do condo associations need insurance?
Yes. Associations often must meet insurance requirements set by governing documents and applicable laws; agents should confirm what applies in their state and CC&Rs.
What is the governance of a condominium?
Governance is the structure of rules, bylaws, and decision-making processes led by the condo board to manage the community and remain compliant with state laws.
Do condo policies have other structures coverage?
Typically, association policies focus on common areas and shared property. Coverage for “other structures” is not standard and may need to be added separately.
About Kevin Davis Insurance Services
For over 35 years, Kevin Davis Insurance Services has built an impressive reputation as a strong wholesale broker offering insurance products for the community association industry. Our president Kevin Davis and his team take pride in offering committed services to the community association market and providing them with unparalleled access to high-quality coverage, competitive premiums, superior markets, and detailed customer service. To learn more about the coverage we offer, contact us toll-free at 855-790-7393 to speak with one of our representatives.