Kickstart 2025 with an Insurance Checkup

As we kick off the new year, it's the perfect time for HOAs to take a fresh look at their insurance coverage. 

This annual checkup is a smart way to ensure your community is properly protected and that you’re ready for whatever comes your way in 2025! 

Here are some important considerations to help you make sure your association has the right coverage in place.

✔️ Are Your Liability Limits Adequate?

General Liability coverage is a must-have for every HOA, but it’s important to double-check that your policy limits are appropriate for your community’s size and needs. 

Most standard policies offer $1M per occurrence and $2M aggregate, but these limits may not be enough depending on the number of units, amenities, and unique features within your association. 

Adding an umbrella policy could boost your coverage and provide extra protection for unexpected claims. 

Also, keep in mind any neighborhood features like pools, playgrounds, or sports courts, which could increase your risk. Ensure your coverage reflects the specific needs and safety concerns of your community.

✔️ Are Property Values Up to Date?

Construction and labor costs can rise quickly, so it’s important to make sure the value of your property is accurate and reflects the current market conditions. 

Failing to properly assess property values could leave your HOA underinsured, potentially leading to significant financial gaps if you ever need to rebuild or repair after a loss.

Underestimating the replacement cost of buildings, common areas, or amenities like pools and playgrounds can result in inadequate coverage, meaning your HOA might not be able to fully replace or repair damaged property. 

To avoid this, it’s essential to regularly update your reserve studies and building valuations. By conducting these reviews on an annual basis, you can rest assured that your HOA is adequately covered, safeguarding your property and preventing costly surprises should the worst occur.

✔️  Review Fidelity Coverage and Financial Controls

Fidelity coverage is designed to protect your HOA from financial loss due to theft, fraud, or dishonest acts by employees, volunteers, or board members. 

This coverage is essential for safeguarding your association’s funds, ensuring that any misappropriation of funds or assets is covered by the insurance policy.

It’s important to regularly review your fidelity policy to ensure that it provides adequate protection for your association’s account balances. 

Make sure the coverage limits align with the size and financial scope of your community, as well as the risks involved. By maintaining a robust fidelity policy, you can help safeguard your HOA’s finances and ensure that your funds remain protected from internal threats.

✔️  Vendor Contracts and Insurance Requirements

Staying up to date on your vendor contracts is essential to ensure they are current and include all the necessary protections for your HOA. 

One crucial aspect to check is whether all vendors have appropriate insurance coverage. Whether you’re working with landscapers, contractors, or cleaning services, each vendor should have liability insurance that covers any potential accidents or damage that could occur while they’re working on HOA property.

In addition to verifying that vendors have the right coverage, make sure your HOA is listed as an additional insured on their policies. This means that your association will be included in their insurance coverage if a claim arises from their work, such as damage to common areas or injury to a third party while on the premises. This simple step ensures that your HOA is protected from potential lawsuits or claims that could otherwise affect your financial stability.

Also, ensure that the insurance requirements outlined in the vendor contracts are specific and deiled. The coverage limits should be appropriate for the scope of work the vendor is performing, and it’s essential to review these limits regularly to keep pace with industry standards and potential changes in risk exposure.

Taking the time to establish clear and comprehensive contracts with insurance clauses can prevent costly surprises and protect your community from financial and legal troubles.

✔️  Conflict Resolution and Loss History Reviews

Disputes can happen in any HOA, but it’s a good idea to have a conflict resolution process in place that encourages arbitration over lawsuits. Arbitration is often a quicker and more cost-effective way to resolve issues between unit owners and the association.

Also, take the time to review your HOA’s loss history on an annual basis. Understanding past insurance claims can help you identify potential risks or patterns, so you can take proactive steps to prevent future claims.

Kickstart 2025 with an Insurance Checkup

Starting the year with a comprehensive insurance review is an investment in your community’s long-term stability. It’s the perfect opportunity to ensure your coverage is up to date, tailored to your specific needs, and ready to protect your HOA in the year ahead. 

Contacting a knowledgeable insurance agent is essential, as they can offer valuable insights into what coverage is best suited for your community’s unique features, size, and risk profile.

Taking the time to assess these key areas will give you peace of mind and help ensure that your community stays protected, no matter what challenges the new year may bring. 

The good news is, you don’t navigate this process alone! 

Working with a trusted team like RowCal can simplify the insurance review process to know if your HOA is adequately protected. Let us help you ensure your community’s coverage is ready for whatever the new year brings.