As an insurance agent working with homeowners association (HOA) communities, it’s essential to understand how excess liability coverage works. This type of insurance provides additional coverage above and beyond the association’s regular insurance policies. This blog post explains the underwriting process for excess liability insurance in plain terms to make it more straightforward for your clients.
Overview of Excess Liability Coverage
Excess liability coverage kicks in when the main policies have reached their liability limits. This coverage is vital for community associations because they face more risks related to shared spaces, amenities, and the actions of residents or guests.
Excess liability coverage provides higher limits, covers more types of incidents, and helps protect against various lawsuits, such as those involving slip-and-falls, property damage, or discrimination claims.
The Underwriting Process
When your clients understand the underwriting process, it sets clear expectations from the beginning.
Initial Application
During this phase, the community association must gather all the necessary information and documentation and complete the application. They should provide details about the association’s property, operations, financial stability, and existing insurance policies.
Assessment of Risk Factors
This stage evaluates the association’s overall risk profile, considering factors such as the size and type of the community, the age and condition of the property, and the presence of amenities like swimming pools or playgrounds. The underwriter also analyzes the association’s previous claims history and loss ratios to gauge the likelihood and potential severity of future claims.
Determining Coverage Limits and Premiums
Based on the risk assessment, the underwriter determines the appropriate coverage limits and premiums for the excess liability insurance. This process involves calculating the association’s potential exposure to liability claims and determining the coverage needed to protect the community’s assets adequately.
Underwriter’s Decision
Finally, the underwriter decides whether to offer coverage. If approved, the underwriter will provide a quote for the coverage, detailing the limits, premiums, and any specific terms or conditions. If denied, the underwriter may provide guidance on how the association can improve its risk profile to qualify.
Factors Influencing Underwriting Decisions
When deciding whether to approve excess liability coverage for a community association, underwriters consider the size and type of the community. They also look at the property’s location, the age of the buildings, and any unique amenities that could increase risks. They also consider the association’s existing claim history and any steps they already take to improve safety.
Importance of Collaboration With Insurance Agents
Insurance agents are important partners in helping community associations get the right excess liability coverage. By working with insurance agents, associations can rely on them to determine their risks, how much coverage they need, and what options are best for them, including excess liability and HOA directors and officers insurance.
Common Challenges and Pitfalls in Underwriting
Incomplete information makes underwriting more challenging for excess liability insurance, as does accounting for substantial risk factors. When your clients misunderstand their coverage needs or the protection their policy offers, it can also lead to complications.
Agents are crucial in helping HOAs gather the necessary documentation, assess their risk profile, and determine the proper coverage limits and premiums. Call Kevin Davis Insurance Services for more information about how you can help your HOA clients.
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.