Insurance, both personal and commercial, share a lot of similarities, but as board members it’s important that you understand the key differences so you can work with your agent to make sure your community is properly covered.
Today let’s cover the four big differences between personal lines (think home and auto) and commercial/business insurance.
- Named Insured – When it comes to personal insurance, the named insured is either a single person or married couple. That isn’t true for commercial insurance. Depending on the type of business (sole proprietor, partnership, limited liability corporation, corporation, etc.) there could be multiple people listed as the named insured. Understanding who needs to be listed is one of the first steps to making sure your HOA gets the proper insurance coverage.
- Property Coverage – Individuals and businesses have different needs when it comes to covering property. For example, a family will insure their home and the policy will cover the structure and the contents of the house. Property insurance for a business covers any structure related to the business, but a separate “contents policy” is needed to make sure the contents of those buildings are also insured.
- Liability Concerns – Businesses are exposed to more liability than individuals and as a result, their liability coverage is more complicated and offers more variety to meet the needs of different businesses. For example, a business (including an HOA) needs to be protected against cyber-attacks, the possibility of someone getting injured on their property, or even a potential employee lawsuit. Individuals, on the other hand, just need coverage to protect them from day-to-day dangers and unexpected events.
- Auto coverage – Although the idea is the same, auto coverage for businesses is more complicated. Auto coverage can vary greatly depending on the type of vehicle, who is driving, and what the vehicles are used for. Additionally, commercial vehicles are often subject to regulations specific to commercial risks, and many times drivers are required to have a special driver’s license – all of which can impact commercial auto coverage.
Since no community is exactly the same as another, you’ll need a specially tailored coverage plan, and you want to make sure you work with an agent trained specifically in HOAs.
Having an agent who is not only an expert in commercial insurance, but who specializes in HOA insurance will ensure your community is properly covered. Knowing these main differences between personal and commercial insurance will prepare your board so you know what to look for and what questions you need to ask!