HOA Insurance - Coverage for Townhome and Condo Associations
Serving Denver, Golden, Lakewood, Littleton, Arvada and Summit County
The Types and Amount of Insurance an HOA Needs is Dictated by the Association Bylaws
Every Homeowner Association has a set of bylaws that were established when the Association was formed. These bylaws will dictate what insurance coverage each partner (association or homeowner) is responsible to purchase. And they should define the boundaries of the common areas and the individually owned property of the homeowners in which 'liability' is incurred.
The common areas and HOA owned property are usually insured by the HOA and covered by the 'Master' HOA Insurance policy. The areas and property within the 'owned' boundaries of the homeowner should be insured with a HO-6 Condo/Townhome
policy which is specifically designed for this type of owned home.
What Types of Coverage Does a Homeowner Association (HOA) Need?
Residents of a condo or townhome association can invite visitors, delivery persons and maintenance contractor which can freely roam around the parking lot, hallways and even enjoy all the commonly owned amenities such as a pool or playground. If a visitor gets injured on the HOA grounds, That HOA will need liability insurance coverage to pay for their injuries. Or if a tree on the HOA grounds falls and damages the car of a visitor the HOA liability coverage will be needed to pay for the repairs of the car.
The HOA needs Building (s) Coverage with a limit which is high enough to replace the structure(s) if they burn to the ground? Although cost estimators are available, we recommend that you secure an appraisal from a third party to accurately determine the current replacement cost of your building. Labor and material costs can vary greatly from region to region. And material availability and it's cost can vary seasonally and fluctuate rapidly according to current demand. Your commercial insurance broker or agent can also help determine the cost to replace your building.
Most HOA's own at least some property such as patio furniture, trash cans, maintenance equipment, outdoor bbq's etc. You will want a limit of insurance for property to replace all it - Brand New.
Building codes change over time. It's important to purchase Building Ordinance coverage to pay bringing the structure 'up to code' before repairs can be made stemming from a covered insurance loss. This coverage is especially important for older buildings.
Water Back Up
If a clog or a break in a pipe that runs underground between the building and the street, and a reverse flow of water or sewage damages the interior of the building, Water Back Up coverage will pay for the interior damage to the building. Since these pipes are 'shared' by all the unit owners, the HOA is responsible for the damage caused by these pipes.
Some HOA bylaws dictate the board purchase 'crime' coverage. Since the collects dues and are held by a person in trust, the possibility of theft of these funds is always possible. This coverage is important to protect the financial position of the HOA and ensure their money is available to pay the HOA bills and maintain the building.
Directors And Officers Liability (D&O)
Most HOA's will also require the purchase of a Directors and Officers (D&O) liability policy
to protect the Board Members. Since they can be held liable if their decisions cause harm to someone else this coverage will pay for their defense costs and damages to the injured party.
At Denver West Insurance Brokers all our agents are licensed and can answer any additional questions about HOA insurance policies. Give us a call at 303-960-5290