When it comes to reviewing a policy for an HOA community, one area that can often cause confusion is what is covered and what isn’t, especially when you consider unique events like construction projects in or near your neighborhood. In this article, we’ll go in depth to cover what may or may not be covered when it comes to construction projects in your community.
Understanding Basic HOA Coverage
Before you can understand what type of coverage you have your neighborhood, you first need a good understanding of the different types of HOA coverage:
- General Liability Insurance: This is basic type of coverage will cover claims that are related to bodily injury or property damage that may occur on HOA property.
- Property Insurance: This coverage will protect the HOA’s physical assets, like community buildings, recreational facilities, or landscaping.
- Directors and Officers (D&O) Insurance: Like the name indicates, this type of coverage will shield board members against claims of mismanagement.
- Worker’s Compensation Insurance: Similar to any workplace insurance, this type of coverage will cover any injuries that are sustained by an employee while performing work for the HOA.
What Does This Mean for Construction Projects?
When it comes to construction in your community, whether it is a erecting a new building, repairing existing property, or general renovations, insurance coverage can vary depending on each situation.
Here are some basic tips to help ensure your community is protected:
Review Your Current Policy: Take time to review your current coverage to see what may be covered or what coverage you may be lacking. If the answer isn’t immediately clear, speak with your insurance provider to guarantee that you have a good understanding of your policy.
Enhanced Protection: Construction usually means that you’ll have contracted vendors working on HOA property. It’s equally important to insure that any third party performing work on behalf of your community also has solid coverage. Before allowing a contractor perform work, verify that they have sufficient coverage and have them add your HOA as an additional insured party.
If a project holds a particularly large amount of danger or risk, consider purchasing additional coverage in the form of Builder’s Risk Insurance, which we will cover below.
What Coverage Do I Need?
Now that you know the different types of HOA policies and the basics tips to ensure you’re covered, let’s review the different policy types and what coverage you may need to stay protected during your project:
- General Liability Insurance: Your basic HOA insurance policy may automatically provide coverage for any construction-related incidents. However, it is still important to review for items that may vary, like coverage limits and exclusions.
- Property Insurance: When construction is ongoing, there could be exclusions related to damage caused by construction-related activities, like negligence or faulty workmanship. It’s important to review what property is covered under your plan and any exclusions that may exist.
- Builder’s Risk Insurance: This type of insurance policy was specifically developed to cover buildings that are under construction, due to the risk of mishaps that can come with construction. This policy is typically purchased by the party overseeing the project, whether that be the HOA or the contractor, depending on the contractual agreement that is in place. Coverage can include damage to the construction site, materials, and even equipment that is used in the construction process.
- Worker’s Compensation Insurance: If the HOA were to directly employ workers to perform work on behalf of the HOA, then a worker’s compensation policy may be needed to cover any potential injuries sustained while on they are on the job. If the workers are directly hired by a third party, like your contractor, then they should be covered under their employer’s contract. But it’s always best to ensure the contractor has that plan in place.
Coverage during an HOA project can be confusing and complex, since there are many different policies and circumstances to consider. By reviewing policies for coverage and ensuring you have a good grasp of what coverage is in place for your community, you can help safeguard your association from any potential liability.
Still have questions about construction coverage? Blue Lime can help you find an insurance policy for your HOA that will thoroughly cover your project. Contact us today to learn more!
