Your HOA as a Business: Handling Insurance Coverage

Every homeowner’s association or HOA is ran like a business. Certain properties, such as condominiums, are attached to each other with shared walls. Individual owners live in each property, which makes insurance coverage a complex concept in many cases. Learn how to handle the master policy insurance connected to an HOA. These residential properties will feel more like business investments as you cover them with adequate insurance.

Deciding on Deductibles

In general, high deductibles equate to lower premiums. Your HOA may want a low premium so that the dues aren’t so expensive. However, be mindful of extremely expensive deductibles. Requiring $5,000 for every incident claimed on a property is steep, for instance. A policy with a $1,000 deductible per incident is reasonable.

Always use a reliable insurance company for your master policy too. Specialized providers, such as Captive Insurance Group, can carve out policies that are fair and balanced.

Defining Walls Out

Every HOA owner must understand that most master policies involving condos are “walls out” coverage. In other words, the property’s exterior elements are covered by the HOA. Any items that fail within the home, such as plumbing or forced-air systems, are the responsibility of the homeowner.

Running the HOA as a business means that the president should encourage “walls in” coverage paid for by each individual owner. With two policies covering the property, any repairs can be quickly addressed.

Getting it in Writing

Any changes or additions to an insurance policy must be documented in writing. Vague terms on the master policy can leave an HOA vulnerable to lawsuits and excessive claims. The insurance will be in legal terms so some associations may want to summarize the content for the residents. Confusion can be solved with just a quick explanation of the basic terms.

Be sure to send out a copy of the master policy every year that it’s renewed. The property owners will have easy access to claims as a result. By running the HOA and insurance process like a business, the property will always be kept up to strict standards.

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