If Not, You May Be At Risk for an HOA Insurance Claim
Community managers have a lot of responsibilities. Although they just have one job title, they often wear a lot of hats that could very well justify adding several more titles. Some of these include finances, legal, landscaping, human resources, real estate, insurance, and even psychology and mediation. While insurance policies are ever apparent in the HOA industry, not every company considers the importance of having a policy for their community managers. They assume that they’ve adequately covered risk for their managers because:
- Their clients have signed a hold harmless provision or an indemnity agreement
- Their client’s general liability policy covers incidents at the property
- The client’s directors’ & officers’ liability will offer coverage if needed
While these factors do cover some risks, they don’t protect a community from all possible claims. Even if a community manager is well trained and highly competent, they are still human and likely to make mistakes at some point while fulfilling their responsibilities. In today’s increasingly litigious society, it can open up the possibility of costly insurance claims for your HOA.
We’ll paint a few possible scenarios for you about community manager claims that likely wouldn’t be covered by the three factors listed above:
- A claim for diminished property value due to improper management and maintenance of properties
- A loss of income claim due to a reduction in rents because of poor upkeep of the community
- Discrimination claims related to rules and CC&Rs
- Discrimination claims related to leasing of properties in the community
- Claims related to the sale of real estate in the community
- Wrongful termination of employees of the community manager
- Wrongful termination of employees of the property owner under the supervision of the community manager
- Administrative and licensing actions against the manager
So how can you protect yourself against these types of costly claims?
An errors and emissions policy is a good place to start. This type of policy fills in the gaps where the client’s insurance policies still expose the manager to risk of a claim. It protects them against honest mistakes or misjudgments they may make, as well as allegations that may not even be warranted.
Choosing an errors and emissions policy that covers all of the bases for a particular community manager can be difficult though. Each manager has a unique responsibilities depending on the type and quantity of the communities they manage. That’s why working with an HOA insurance company like Blue Lime can make sure all of your risks are considered and that your policy protects you from claims like those outlined above.
Even if you do have a thorough errors and emissions policy for community managers, it’s still a hassle to have to deal with them in the first place. Here are a few guidelines for being proactive about preventing the claims from occurring at all:
- Ensure that everyone has a thorough and comprehensive understanding of fair housing and discrimination laws, as discrimination and harassment association insurance claims are some of the most common brought against community managers.
- Invest time in HOA Insurance educational opportunities.
However, despite even the best training and knowledge, claims will almost always happen at some point during the career of a community manager. Investing in the right coverage can give you peace of mind that even when these claims do occur, you have the coverage and the resources to fight them.