Insurance for HOA Management Companies

Appropriate insurance is important to protect the association from suffering a major financial loss. When dealing with insurance issues, it is important to understand the different types of insurance.

General Liability

Liability coverage insures against third-party claims arising from alleged bodily injury or property damage to members of the public. The insurance company has the duty to defend the association against any claim that alleges injury or seeks damages regardless of whether the association is negligent. A comprehensive general form is preferred because it covers all operations of the association and is not restricted to the association’s premises.

Personal Injury

This coverage extends bodily injury to include false arrest, detention or imprisonment, malicious prosecution, libel, slander, defamation of character, invasion of privacy, wrongful eviction and wrongful entry. Some forms may also include coverage for humiliation and discrimination.

Medical Payments

This type of insurance provides coverage for medical expenses of members of the public injured on the common property whether or not the association is liable.

Directors and Officers’ (D & O) Coverage

This coverage provides protection against claims alleging loss arising from mismanagement or wrongful acts. A wrongful act means any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by the association.

Fidelity (Employee Dishonesty) Coverage

This coverage indemnifies the association for loss of money, securities, or any other property due to acts of fraud, dishonesty, forgery, theft, larceny, embezzlement, wrongful abstraction, or willful misapplication or misappropriation, or any criminal act.

Workers’ Compensation

This coverage insures against claims for work-related injuries or diseases suffered by employees that are compensable by statute and/or are imposed by law as damages. Coverage is provided for payment of medical expenses and reimbursement of lost wages. Coverage should be considered even if there are no regular employees. Protection may be needed in the event the association employs casual labor or if the association hires an independent contractor who has no insurance coverage.