Board members have the fiduciary duty to protect the interest of their homeowners’ association by ensuring that the community has adequate insurance coverage.
Because obtaining the right insurance to cover all your community’s needs at the best price is not always an easy feat, we’ve put together a few tips to help you prepare for the process of obtaining an insurance proposal for your HOA:
Gather Necessary Documents
If your board is shopping for a new insurance provider or policy, in order for an agent to bid your association’s insurance correctly, you will need to provide a copy of the dec (declaration) page from the HOA’s current provider.
You will also need a copy of the association’s CC&Rs (Covenants, Conditions, and Regulations). If yours is a condominium complex with multiple buildings, you will also likely need to provide a map of the complex which shows marked addresses.
To ensure that your HOA is getting the correct coverage, it’s important that the agent is able to review these documents. The association’s coverage must meet guidelines dictated by the association’s CC&Rs.
Select an Independent Agent
It’s critical to find an independent agent who specializes in HOA insurance. An agent with these qualifications will be familiar with the particular needs of an HOA. Specifically, they will understand how to read and interpret the governing documents, have knowledge of vendor relationships and the importance of obtaining a COI, be able to provide workers compensation coverage, utilize information provided in the association’s reserve study, and be knowledgeable about the general needs of the association.
In short, an agent specializing in association insurance will be able to properly assess your HOA’s current policies and suggest necessary changes because they understand what each type of coverage provides, and they understand the particular needs of an HOA.
To maintain the most cost-effective coverages, it’s often necessary to obtain multiple bids on your association’s insurance on an annual basis. This will protect the homeowners’ best interest and help the board avoid paying more than they should.
An independent agent will have access to various carriers and will help you find the best deal for your particular association. You will need to make an informed decision so that you can select an insurance broker that represents your community in the best manner possible.