Homeowners associations are a great resource and an effective tool for managing a neighborhood’s appearance and enforcing essential regulations. Of course, not everybody is appreciative of the efforts that HOAs exert, and sometimes there are liabilities involved in conducting HOA business. As a result, HOA insurance is an excellent investment, if not a necessity. What type of insurance does an HOA need? Do HOAs need property insurance, or a specialized HOA policy? Read on for more information about what coverage is right for your client’s HOA.
Replacement Cost Insurance Policy
Founding documents for an HOA will typically indicate if a specific type of insurance is required for the association to operate. Even if no such policy is indicated, it is important to invest in coverage like a replacement cost insurance policy to protect your client’s HOA from potential losses. A replacement cost policy entitles policyholders to reimbursement for the full value of lost or destroyed assets, less the policy’s deductible. This offers great protection to members of an HOA whose homes may be damaged or destroyed.
Catastrophic Event Coverage
One of the most common causes of such damage is a catastrophic event. The likelihood of a 6.7 magnitude earthquake hitting the Los Angeles area is 60% in the next 30 years. Indeed, an earthquake or even just a severe storm can wreak havoc on homes. HOAs can help to protect residents from these expenses by investing in catastrophic event coverage. Catastrophic coverage can offer the following benefits:
- Cover cost of damage incurred by event
- Help recover and rebuild structures
- Cover additional living expenses incurred
Catastrophic event coverage is one of the best investments your client’s HOA can make for the safety of its members. Find a policy that’s designed for HOAs and covers the events most likely to happen in your client’s area.
Fair Market Value Policy
If an HOA is looking to save money on coverage, a fair market value policy can help them minimize premiums and make a policy more affordable. Typically, this type of policy works by subtracting both depreciation and the deductible if a settlement is offered. In short, the older an asset is, the lower the settlement amount will be. This deal makes coverage less expensive, but it also places a greater burden on the HOA and its members if damage occurs.
Protecting HOA Members from Liability
There is no way to prevent damage or disaster, but there are ways to guard the HOA and its members against the impact. A good HOA insurance policy is the best defense against expenses incurred by disasters, man-made damage, or any other qualifying event that necessitates coverage. A qualified insurance agent can help HOA members find the right coverage and minimize liability.
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.