HOA risk management should be a priority for every association. But whether it is or it isn’t, it’s never too late to start thinking of ways to prepare for potential HOA exposures. Whether that means developing a specific risk management plan or delegating it out to an HOA risk management company, it’s important to put forth valuable effort to help guide the HOA’s future. With a solid response plan, HOA risks can be targeted and understood, helping an association avoid major HOA lawsuits. Sticking to certain risk management standards can help ensure that an HOA is doing its best to uphold an enviable and forward-thinking community.
Here are some things to look for when pinpointing and addressing common HOA risks.
What Are Common HOA Risks?
An association will want to consider and be prepared for any risks of HOAs, whether they’re obvious or subtle. That could include fraud, lost contracts, conflicts within the community, or natural disasters. Here are some other common HOA risks:
- Property: Natural disasters and property damage fall under property risk. Whether it’s flooding or strong winds or a monsoon storm, an HOA needs to be prepared. Similarly, HOA facilities and amenities must be kept in good condition. If not, homeowners and those who use these amenities, such as a playground or gym, could get injured, bringing major HOA lawsuits.
One way to avoid property risk is to keep thorough inspections regular. From looking into chlorine levels in pools to checking that hoops on basketball courts are tightened, inspections can help to mitigate risks for HOAs.
- Disputes Amongst Homeowners: We all would like to think that neighbors get along. However, disputes among neighbors are quite common, so an HOA must be prepared to hear both sides of an argument. A frequent dispute amongst neighbors has to do with noise. Problems with pets is also high on the list as well as child complaints.
To take care of this, HOA clients should make sure that every homeowner is well-informed of certain rules and regulations surrounding noise, visitors, and pets.
- Cybersecurity: It’s now become commonplace for HOA’s to digitize practically every document and bit of data, including sensitive financial information of the HOA and its members. While a digital system is convenient, it does come with a high level of risk related to cyber crimes, such as ransomware and malware.
To protect against this, an HOA should make sure to place a significant amount of focus on cyber health. This means putting up effective firewalls and passwords that protect everything thoroughly, while also beefing up security with cyber liability
Developing a Response Plan
An HOA should consider each area they have listed that could possibly go wrong and have the HOA board determine the right direction and risk management plan for protecting against certain claims and HOA risks. It’s important to make sure each member understands the severity of these risks and knows how a response plan works.
It’s a good idea to focus on major risks compared to more pedestrian risks. In this way, if time is limited, an HOA can work on the lower risk disasters when time permits. It’s important to reduce the highest vulnerabilities and potential risks earlier.
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.