When it comes to protecting the community you reside in, obtaining association insurance is one of the most important and impactful things your association can do. Association insurance can be tricky, and without the adequate knowledge to navigate its murky waters, some mistakes can be made.
Here are several big mistakes that can be committed with association insurance:
Neglecting Your Policy
Many associations make the mistake of thinking that once they are covered all is well. However, chances are that over time your community needs have changed. Perhaps new homes have been built, maybe a club house was added, or perhaps theft becomes more predominate in your area.
The best way to avoid neglecting your policy is to place a board member in charge of maintaining it. Regular review of your insurance policies will make sure you are adequately covered, that nothing has expired, and that everything is up to date. It is also important to know your deductible amount, and have it saved up so you don’t have to scramble when the time comes to use your insurance policy.
Missing Out on Adequate Coverage
Only 50% of homeowners’ associations maintain their insurance policy, and only 25% of those with coverage have an adequate amount. There are many insurance policies you could obtain for your association, but having excess coverage could be expensive. On the flip side, too little coverage in the event of a catastrophe could also cause financial distress for your association. One of the best ways to make sure your association gets the proper amount of coverage is to seek the guidance of an experienced and reputable broker. Insurance brokers are not only there to sell you insurance, they also have the obligation to answer your questions regarding the policies they sell.
Not Knowing What Types of Insurance to Obtain for Your Community
It is essential to know what types of coverage are available so you can find what suits the needs of your community best. With the help of an experienced insurance broker you can discover the types of insurance policies available to your association. This knowledge may very well be the most important knowledge to gain when shopping for insurance. Knowing what types of coverage are available allows the peace of mind gained when you know that your pool can be protected from both liability as well as damage, that your sidewalks and driveways can be protected from damage by the snow removal services, that your clubhouse is protected in the same way your own home is protected from weather related and accident related damages, or that your association is protected from any liability pertaining to playgrounds and parks within your community’s stewardship.
Obtaining Too Many Bids
Many boards are accustomed to deliberating over 2 or 3 bids when considering changes to vendors or contractors for an association. So, when you discover the myriad and multiple types of insurance you might be tempted to bring several bids in just to cover the bases. Unfortunately, this would be more counterproductive than you would think. Because insurance brokers will sell policies from several different companies it’s possible that if you ask for bids from more than one or two brokers you will get overlapping bids and perturbed insurance companies. Sticking to fewer brokers will not only help your board members decide, it will also help your brokers get the best price from each company they solicit.
Failing to Document Current Property Conditions
Too often, associations have been surprised by insurance claims paying out too little because the adjuster uses average values instead of actual values. This can be prevented with good documentation and proper maintenance. If the roof of your clubhouse gets damaged by ice and snow and you don’t have documentation showing that your property maintenance company cleans out the rain gutters every year before snow fall, you may end up with a claim payout showing a steeper depreciation than reality would dictate. Keeping current records of servicing and repairs completed as well as pictures of well maintained property will aid you in receiving the amount you expect your claim to pay rather than an averaged amount.