Homeowners Association Insurance and Natural Disasters

The most unexpected east coast earthquake of 2011 was felt all across the Washington Metropolitan Area and as far as New England, Ohio, and the Carolinas. Fortunately, only minor damage was reported.  While this is an extremely rare case it does raise questions of insurance coverage.
Of the many things your association assessment pays for, insurance is one of the most important. Association governing documents and state law require the association board to purchase adequate insurance as part of a comprehensive risk-management program.

There are two major types of commercial insurance coverage for an Homeowners Association (HOA) —property and liability.

Property insurance covers loss of or damage to any common structures or physical property caused by fire, flood, storms or other natural events. For instance, if high winds uproot a tree that damages a common roof, the association’s property insurance would cover the cost of repairs. Property insurance may also cover what we call “human perils” (such as theft) and “economic perils” (such as stock market fluctuations) that might impact our association’s investments.

Liability insurance covers losses that would result if someone took legal action against the association for an injury, financial loss or other type of damage.

It is imporant to communicate with your insurance professional to ensure that you have the appropriate coverage for your unique HOA needs.  If you have a professional community association manager they will facilitate this evaluation at least on an annual basis.

The association’s insurance does not cover private property of owners or residents.  Each member should have his or her own insurance policy for their home or belongings. If you need information about homeowners insurance, talk to a licensed insurance agent who specializes in homeowners associations. Or you may want to talk to the association’s insurance provider; this person will know exactly where the association’s master policy coverage ends and where yours should begin. This prevents you from over or under insuring yourself.  If you have a professional management company, contact them and ask for a reference.

Let's all hope that earthquakes will not require regular consideration during HOA insurance reviews in our region any time in the near future.

Courtesy HOA Management