Understanding HOA Insurance: Coverage Types Every Community Needs

When disaster strikes, the last thing your homeowner’s association (HOA) needs to discover is that it is underinsured. From storm damage to costly lawsuits, HOA communities face a range of risks that can quickly drain budgets and disrupt operations. 

That is why insurance is so important for your community. But to get the most out of your insurance coverage, you need to choose the right HOA insurance. 

Feeling overwhelmed by your options? D.H. Bader Management is here to help. Learn more about HOA insurance, its importance, and how to choose the right coverage for your community below. 

Why HOA Insurance Matters

No Hoa should operate without having the proper insurance coverage. HOAs manage valuable assets and are responsible for common areas, such as clubhouses, pools, landscaping, and roads. Without the right insurance, the costs of property damage, liability claims, or legal disputes can quickly overwhelm the HOA’s budget. 

Therefore, to ensure financial stability, your HOA needs a strong insurance policy. It will protect both the HOAs and the homeowners’ finances and interests. 

Essential Types of HOA Insurance Coverage

Not all insurance policies are created equal, and for HOAs, missing even one key type of coverage can be a costly mistake. To keep your community fully protected, your Board needs to understand the core policy options. 

Below are the essential types of insurance every HOA should have. 

• Property insurance – This coverage protects community-owned property and structures from losses caused by fire, storms, vandalism, or other events. Parts of the community covered by property insurance typically include buildings, fences, landscaping, and shared amenities. If your region is prone to flooding, you will need to add that protection to your policy, as it is often not included. 

• General liability insurance- Liability insurance provides financial protection if someone—either a resident, visitor, or worker—is injured on common property or if the HOA is found legally responsible for property damage. This type of insurance can drastically reduce the risk of costly lawsuits. 

• Directors and officers (D&O) liability insurance- Board members make important decisions for the community. D&O insurance protects individuals from personal financial liability when they carry out their official duties. 

• Fidelity insurance- Also known as employee dishonest insurance, fidelity coverage protects the association’s funds if they are stolen or misused by an employee, Board member, or third-party manager. 

• Workers’ compensation insurance- If your Hoa employs staff or hires contractors, you will need workers’ compensation. It provides coverage for any medical costs and lost wages if an individual experiences a work-related injury. 

• Umbrella liability insurance- This additional coverage extends the limits of liability policies, providing extra protection for major claims that exceed the limits of your HOA’s primary insurance policies. 

Choosing the right mix of insurance policies requires careful planning. The team at D.H. Bader Management will work closely with your Board to help you make this crucial decision. Let our team ensure your community receives the best possible rates and protection. 

Contact D.H. Bader Management today!