Which Insurance is Right for Your Self Managed HOA?

When it comes to operating a self managed HOA, expect the unexpected. A responsible board has a plan for even the most surprising of situations.

HOA insurance helps you prepare for a variety of unplanned circumstances. It covers any risk associated with an HOA’s day-to-day operations, including property damage, legal fees, medical expenses, and other liabilities resulting from negligence, errors, or omissions.

Benefits for Board Members

A self managed HOA relies on board volunteers to make decisions, manage daily tasks, and maintain the neighborhood quality that residents expect. Board members deserve the best support and protection for their significant time commitment and willingness to make weighty decisions for the community.

An HOA insurance policy protects board members from personal liability arising from decisions they make in their role. In the unfortunate case where a board decision ends in a legal battle with a community member or vendor, HOA insurance will cover or at least reduce the cost associated with legal fees, protecting board members from personal financial risk resulting from their service to the association. 

Choosing the Best Insurance for Your Self Managed HOA

There is no one “right” insurance for all self managed HOAs. The right insurance for your HOA will depend on your needs, budget, and the unique risks you are subject to. 

These risks could stem from your location; for example, an HOA in a coastal area may be at risk of hurricanes, while a midwestern location may be subject to tornadoes. Or, they could rise from the facilities and events you host. For example, if your HOA has a public pool or gym, people are more likely to injure themselves on HOA property than in a neighborhood without these amenities. If your HOA hosts many events, you may want insurance that can cover personal injury or property damage that can occur at these events.

Ultimately, board members should discuss choosing the right insurance, perhaps in collaboration with a lawyer or experienced advisor. But, one should be aware of the types of insurance for self managed HOAs available. 

General Insurance

General insurance typically covers property, liability, and directors and officers. The coverage is usually purchased from a single insurer and comprehensively covers risks associated with an HOA. This simple option provides effective coverage, but depending on your situation, you may want to look for more specialized coverage. 

Property Coverage

Property coverage will cover costs from physical damage to buildings, common areas, and some furniture, fixtures, and equipment due to events such as explosions, fires, and windstorms. 

Liability Coverage

Where property coverage will recoup losses from property damage, liability insurance covers people. It will protect board members from legal or medical costs that could arise from property damage or personal injury at an HOA-sponsored event. Liability coverage will typically pay for legal defense in the case of a lawsuit against the board, but you’d need to check the details with the specific insurance provider.

Directors’ and Officers’ Insurance

Directors’ and Officers’ insurance also covers board members, but this type of insurance is related explicitly to outcomes from a board decision. Directors’ and Officers’ insurance shields board members of a self managed HOA from personal liability stemming from choices made in their role. 

The Price of Protection

With natural disasters on the rise and HOA lawsuits fairly common, investing in quality insurance will prepare your HOA for the worst. Taking the time to research ensures you get the best price for the coverage you need. 

Following these steps could help you find the right insurance for your HOA.

1. Assess the specific needs of the board and the HOA.
2. Obtain quotes from multiple insurers.
3. Make sure the policies provided meet the needs decided upon by the board.
4. Compare quotes to customer reviews.
5. Analyze cost, services, and feedback from customers to decide what’s right for your HOA.

Conduct a thorough cost-benefit analysis before selecting the right policy. Allow plenty of time, and consider bringing in experts to help you make the right decision.

Staying Safe with HOA Insurance

Once the board has selected a policy and provider that best serves the HOA, continue to follow safety practices for the community’s well-being and to avoid claims against your board or HOA. A good insurance policy is no excuse for negligence. 

Identifying and managing risks are essential duties for an HOA board.

1. Evaluate safety measures and their enforcement. 
2. Implement new standards and policies as needed.
3. Educate board members frequently about safety policies. 
4. Discuss concerns for the community.
5. Conduct regular reviews of facilities, emergency plans, and other procedures related to the safety of residents and facilities. 

These risk management strategies reduce the chances of claims against the HOA or its board members. But, even with the best safety strategies, disaster can strike. Evaluate your insurance policy periodically to ensure you’re still covered.

Reviewing Your Insurance Policy Regularly 

As an HOA board, it’s your duty to keep track of your insurance policy to ensure it is up to date and continues to meet your organization’s needs. Consider creating a process to track the renewal date, and clearly delegate the responsibility of renewing the insurance policy.

Your board should regularly review your policy to check that it still covers all your needs at a fair price. You can request quotes from other companies again to ensure you’re still getting the best deal for the coverage you need. 

Feel free to call on support from your insurance broker or another specialist if you have questions or concerns about your policy. Document contact information and support resources regarding insurance for transitioning board members so everyone knows who they can rely on for help. 

Self Managed HOA Software Can Help

One of the most significant benefits of self managed HOA software is that it simplifies managing insurance. HOA-specific software can streamline filing claims and making direct payments to insurers. 

Some HOA software supports communication between board members and residents, allowing board members to easily update everyone involved about relevant changes to HOA insurance policies. Board members can send safety updates through the software if problems persist and track maintenance requests to track ongoing issues with specific buildings that could lead to a safety hazard. 

HOA software encourages open and continuous discussion between board members and residents. PayHOA’s software even allows resident surveys to ensure everyone is on board with policy changes.

Overall, HOA software enhances transparency, which promotes good decisions. The board is more likely to run an open and honest operation when residents can easily access documents and monitor its actions.

The Benefits are Clear

HOA software helps self managed HOAs run as smoothly and ethically as possible by:

• streamlining the process of managing insurance
• promoting good decisions by enhancing transparency 
• facilitating communication between board members and residents

HOA software is a powerful tool for any self managed HOA. PayHOA’s software is a holistic solution that supports your self managed HOA in every aspect, from finances, to communication, to managing insurance. Call today for a 30-day trial to test the all-inclusive solution your board has been waiting for. 

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PayHOA offers an HOA management software solution for HOAs of any size or managerial priorities. To find out if PayHOA fits all your HOA management needs, try our software free for 30 days.