There are often several policies used for home and condo associations, what are they and why do we have them? Here's a brief overview of typical assocation insurance policies, what they are for, and how the price may be determined. This is a brief overview, feel free to contact us any time for a more indepth review.
General Liability
Most businesses and organizations have this as a starting point for insurance. It is meant to cover bodily injury, property damage, medical expenses, libel, slander, advertising injury for which the organization is liable. Legal defense costs are sometimes included in addition to the policy limit, even if you are found not guilty.
Being liable is obviously the big question here, if something happens within the walls of a private home or condo the policy that covers that unit may be the one to cover the injury. But it's entirely possible for the injured person to sue the association as well. If someone is injured in the hallway or elevator of a condominium or maybe getting out of their car in the parking lot, the association policy usually kicks in first.
The annual premium for this coverage can be influenced by:
Number of units in the condominium
Number of homes in the neighborhood
Number of pools or hot tubs
Number of playgrounds
Acreage of common area, such as retention ponds or playing fields
Square footage of any building owned by the association, such as bathrooms, poolhouses, meeting rooms, etc
There is usually an added fee on the policy if any of these are rented out to non-owners
Directors and Officers
Being on the board of directors for an association can bring perks and headaches. Mostly headaches. We have placed insurance over the years for many associations, some understand this coverage well and others don't. An important distinction with this type of policy is whether it is Claims Made or Occurrence based because what happens once you leave the board?
Claims Made means the policy will only cover a claim reported during the policy term
Occurrence means the policy only covers an incident that occurred during the policy term
Claims Made policies have a retroactive date, meaning they wont cover anything that happened before a specific date and once a claims made policy expires there is no coverage if a damage is later discovered or reported. Occurrence policies block off a period of time and will forever be responsible for those dates, even if it isn’t reported until after the policy expires. Prior acts can often be included in this type of policy, which is the more common type for this coverage. Since a lot of money is handled by association directors and officers, it can take years for some things to be discovered so be sure to take the future into account.
Annual premium can be influenced by:
Number of Board Members or Directors
Number of units or homes
Annual revenue of association
I would recommend to anyone serving on a board or as an officer in a home or condo association to ensure this coverage is in place.
Property Insurance
This policy covers the property owned by the association. For condos this is usually main structure including the roof, walls, subfloors, all the way to the foundation. Unit owners are usually responsible for everything inside the drywall but check with your association bylaws on who is responsible for what. Townhome or commercial/mercantile associations can be more complicated, especially who is responsible for the roof, so be sure not to insure things twice (once under the association and again under the homeowners policy)
Things you probably want included
Special Coverage
Wind and Hail
Business Personal Property
Replacement Cost
Things to avoid
Actual Cash Value (especially on anything built before 1990)
Hurricane deductibles with high minimums (look beyond the %, can be as much as $25,000)
Under or Over insuring (an annual appraisal will solve this)
Annual premium can be influenced by:
Quality of construction
Age of buildings
Square footage
Distance to coast
Last updates to plumbing, electrical, roofing, or HVAC
Prices can change wildly year to year and from insurance company to company but I know it's a hassle quoting this all the time. We're committed to doing our best to make it easy for you so give us a try today!
Only a few more, hang in there!
Flood
Flood insurance is a constantly changing thing. FEMA is the financial backing to most policies, which should scare you right there, but it leaves the administration to private companies. These companies get a tiny cut but you should see standard prices regardless of which insurance agent you use. The main thing to consider here is coverage amount and deductibles
Annual premium can be based on
Flood Zone
Elevation (certificates required for structures in an A or V zone)
Crime and Bonds
This type of coverage fills a gap left by insurance. Most insurance policies won't cover intentional acts, such as dishonesty, embezzlement, or forgery. A bond is an inexpensive way to protect the condo unit owners by ensuring money is handled appropriately. If you're involved with the insurance policy some of these associations have you know there can be a lot of money involved.
Annual premium can be influenced by:
Number of units
Number of employees or people handling money
Procedures in place
Amount of coverage requested
Umbrella and Excess Liability
Because there are so many people involved with these types of policies, it is a good idea to have excess coverage. General Liability policies have one limit for each occurrence and another for the total covered in a year. These limits are often 1million per occurrence and 2million per year. Imagine if more than one homeowner or condo owner sued at the same time, or imagine if they all sued. That aggregate limit would run out quick. This is where an Umbrella (aka Excess Liability) can help, by expanding the annual limits it can help cover more claims in a worst case scenario.
Annual Premium is usually on a scale, with limits available up to 10,000,000 in many cases.
Workers Compensation
Since many associations have no employees, there is a policy that covers "if any" is hired that has no coverage of their own. It acts as a good backup for workplace injuries and could be more affordable than you think. If your association has employees, see our recent blog post about workers comp for more. If you hire uninsured subcontractors, you may have a liability and should look closer at one of these policies.
Hired Auto and NonOwned Auto
This post has been too long already so see our follow-up blog post for more about this coverage.
Norton Insurance has been insuring property and associations in Santa Rosa Beach, Miramar Beach, Destin, Fort Walton, Okaloosa Island, and Navarre Beach for 40 years and would be happy to sit down with you to discuss your needs. Feel free to fill out a request on our website for more information or call us today!