The Importance of HOA Insurance

Posted by Omega Property Management | Feb 18, 2021

Like all insurance, HOA insurance protects assets and offers financial assistance should the unexpected occur. There are different types of insurance that may be required, depending on the type of association. Since member dues cover the cost, it is important that you provide the best policy for your community. Read our blog as we discuss the importance of HOA insurance.

General/Liability Insurance Coverage

General/Liability generally covers the risk of any physical damage to common areas as well as general liability should a guest be hurt in one of these areas. Common areas include swimming pools, gyms, tennis courts, park facilities, common area bathrooms, and clubhouse areas. Common areas should also include common grounds.

Determining Adequate HOA Insurance Coverage

As an HOA, it’s important to effectively prepare for the probability of some type of loss by buying adequate insurance coverage. To ensure you have the right type and amount of insurance, be sure to verify replacement costs associated with different aspects of your common areas. We rely on our insurance agents who deal specifically with HOAs to provide the best policy based on the needs of the community and the requirements in the Association’s Declaration.

Types of Building Ordinance Coverage

In addition to determining amount of coverage, look for policies that include Building Ordinance. Here are some different types of policies to consider:

  • Coverage A is Contingent Liability – provides coverage for undamaged portions of property, such as when half a building burns down or is damaged but the rest is in good shape.
  • Coverage B is Demolition – covers the cost of demolition, including the need to use heavy machinery to clear out damaged structures.
  • Coverage C is Increased Cost of Construction – includes coverage for building code upgrades related to local ordinances and/or to address the increased cost of construction.

Sewer Drain Back-Up Coverage

This coverage covers the cost of back-up and property damage due to someone flushing an object(s) down a toilet that should not be flushed. It also addresses back-ups caused by laundry soap build-up in common area lines. Check with your agent to confirm if the policy covers tree roots as well as the removal of roots.

What Is D & O Liability?

D & O Liability, or Errors and Omissions Liability, is defense (expenses) and indemnity (awards and settlements) for wrongful acts and allegations against the Board of Directors. These types of liability claims may include monetary or non-monetary, breach of contract, violation of CC&Rs, discrimination, and libel/slander. Most of these claims are non-monetary, such as a claim that the Board failed to purchase adequate insurance.

Your Insurance Consultant and Partner

Many of these HOA insurance coverage examples may be important to your Association or may not be relevant. During onboarding, our dedicated Insurance Coordinator will review your existing policies and recommend any changes due to industry best practices or requirements within your governing documents.

Omega Property Management works as your property management company partner to help assess your insurance needs. We are here to apply our expertise and experience to your HOA to ensure you have the right HOA insurance coverage for your Association. For additional information and questions, please email our Customer Service Team at or call 763.449.9100.