Excess liability is something that HOA leaders should consider when thinking about liability and insurance plans. When working with community association clients and recommending coverage, you must often educate them about critical differences between two similar-seeming policies. Sometimes, they might think about only looking at umbrella insurance.
Why Excess Liability is an Option
Clients may want to purchase just umbrella coverage, exposing them to serious liability lawsuit risks. Therefore, they should know about excess liability and what it does.
Benefits of Adding Excess Liability Coverage
Explaining the additional protections offered through excess liability can help your clients make educated decisions on their insurance coverage. Umbrella policies only expand the scope of coverage to losses or claims not included in the original contract terms, while excess provides a higher limit for covered events.
The significant financial risks community associations face are better protected when increasing policy limits for particular events.
Reasonable Expectations for Excess Liability Coverage for Community Associations
Recent years have seen an increase in the number of claims and lawsuits filed and the payment amount for settlements or judgments against community associations. Trends in claims over bodily injury reveal extraordinarily high payouts, sometimes upwards of double digits in the millions. Even if a liability policy exists, the common limit for community associations is around two million. However, more forward-thinking clients will accept a five to 10 million limit policy.
By sharing these trends, your clients can reasonably assume that standard coverage isn’t enough to keep them from severe financial difficulty. Community associations without enough liability coverage face out-of-pocket costs that could bankrupt the organization. You can play a role in safeguarding the organization’s future by helping them prevent lawsuits and recommending excess liability coverage.
Tips for Helping Clients Prevent Lawsuits
Give your clients some guidelines on reducing their liability. Here are several tips to share with them.
Keep the Proper Insurance
Your expertise in this area makes it easier to determine which insurance policies are appropriate and comprehensive for the organization. In addition to general liability with excess coverage, it’s essential for associations also to carry property, fidelity, umbrella, and directors and officers coverage. Make you review their potential exposures to determine how much coverage is necessary.
Evaluate all Contracts
Remind your clients to review any contracts put before the board carefully. The association needs to know the details of the contract to avoid key liabilities like uninsured contractors, contract termination elements, or warranty claims. It’s always advisable for associations to rely on legal counsel to review a contract before signing.
Remain Consistent in Enforcing Restrictions
Community associations can enforce restrictions, but they should do it consistently and appropriately to avoid litigation. Failing to enforce rules could result in a breach of duty claim. Contracts should also clearly state consequences for infractions and the notices and rights to implement actions and consequences.
Issue Reports With Resale
To address violations with properties or inform a homeowner about past concerns, associations should present a report at each notice of resale. Failing to notify of critical information could cause the association to forfeit unpaid assessment.
Service With More than Just Excess Liability Coverage
When advising your clients on insurance policies, do more than recommend excess liability. Offer them solutions for preventing lawsuits.
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.