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Community Association Insurance Condo CoOp HOA, Florida


What does property insurance cover for a condominium association or HOA?

Property insurance for a condominium association or HOA covers buildings, land, inventory of equipment, supplies, furniture, signs, common elements of outdoor property and records. Location, age of building, type and age of roof and claims history are relevant factors.

What protection does a condo association or HOA's Fidelity Bond offer?

The Fidelity Bond is to refund the community association for stolen money. This type of policy usually includes a deductible.

What is the purpose of Equipment Breakdown insurance?

Equipment Breakdown coverage is usually purchased when the Association has an elevator. The purpose of this type of coverage is to insure against mechanical or electrical devices that are damaged by a covered peril (such as a lightning strike that damages an elevator device) that is not covered by the property policies. It is not however an elevator maintenance program or a central air conditioning replacement program. Wear and Tear is not an insurable risk. This is why Condo Association should have a reserve study in place to budget for necessary upgrades or maintenance.

How is the price of Liability Coverage determined?

The rates for this policy do not fluctuate as much as other policies bought by condo associations and HOAs since the statistics they use are less volatile.

What does a Commercial General Liability provide to an HOA, a cooperative or a condo association?

The second costliest policy is usually what is called the Commercial General Liability policy - CGL - which covers the Association in the event of a liability claim against it. A slip and fall due to negligence is a classic example. Or an injury in the Exercise Room of the Condo is another. The maximum coverage for these policies is usually $1 Million per occurrence or claim and $2 Milion total aggregate for the entire year. This is why, with high-rises on the beach worth $50 Million and more, most Associations have an umbrella policy which kicks in to cover the Association for a claim starting at the CGL maximum of $1 Million up to their property value.

What is the importance of a Director's and Officer's Liability policy?

Director's and Officer's Liability policy covers some but not all of the decisions made by the Board of Directors of the Association. For example, a Board can be sued by a disgruntled unit owner who feels that he or she was defamed by a Board member during a monthly board meeting. This policy would be the one who would consider the validity of that claim. It shields the Board members from being personally liable for most decisions recorded at a Condo Board meeting. Without this policy, it would be impossible to find anyone willing to be on the Board. Another mandatory policy is the Crime Bond which pays the Association if there is money missing through Employee Dishonesty. This is usually the cheapest policy in the entire package. The policies listed up until now are usually listed as mandatory purchases in the condo docs each unit owner is given at closing. The following policies are not mandatory but are suggested given the litigious environment in the United States.

Is the insurance premium for Workers Compensation Liability policy of a condo association normally expensive?

Workers Comp Liability is typically inexpensive - less than $1,000. It serves as a last line of defense in case of a claim made by an insured worker employed by a vendor to the Association that injures themselves. A landscaper or a roofer is sent to the emergency room while working on the Condo property. After the fact, it comes to light that the contractor did not carry the necessary worker's compensation. Because the worker was present on the property at the Association's request, the Association will also be in the line of fire of the personal injury that will probably be hired immediately after recovery. The policy should also cover Board members and volunteers injured while performing their duties for the Association.

Our HOA already has CGL. Is Umbrella Coverage also a good idea?

Umbrella Coverage is sometimes misunderstood, but it is really quite simple - all the other liability policies max out at whatever their limits are and it is not sufficient to protect the Association given the high value of real estate in South Florida. This policy is activated when the policies it covers max out their limit on a valid claim. For example, someone sues the Board for $10 Million for a covered reason. The Directors' and Officers' policy maxes out at $1 Million. If the Association has an umbrella policy for up to $10 Million, they are covered and will not have to pass a special assessment to pay for the difference between $1 and $10 Million.

What do Florida statutes say about Flood Insurance?

For communities, Homeowners Associations, and Condo Associations located in federally designated flood hazard areas, condo mortgages will not be written unless adequate flood insurance is in place. The condominium statute states that a condo association or HOA may carry flood insurance.

Flood is defined as:

  • A general and temporary condition of partial or complete inundation of two or more acres of normally dry land area or of two or more properties (at least one of which is the policyholders property) from overflow of inland or tidal waters; or unusual and rapid accumulation or runoff of surface waters from any source; or Mudflow; or
  • Collapse or subsidence of land along the shore of a lake or similar body of water as a result of erosion or undermining caused by waves or currents of water exceeding anticipated cyclical levels that result in a flood as defined above.

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