We all forget things. But forgetting certain ingredients in your homeowners association (HOA) insurance recipe can be a disaster.
These optional coverages can look boring. They aren’t exciting like chocolate. They’re more like salt and yeast that you can’t see. But if you forget them, your insurance recipe can turn out like a disaster.
So, let’s run down the list of some of the ingredients you should discuss with your agent. You may not need all of these, but you should be aware of them.
Umbrella coverage
I mentioned in my last article that you may need umbrella coverage in an HOA insurance policy in California.
Why? Two reasons.
First, even though the Davis-Stirling Act requires a minimum of $2 million of liability coverage, in today’s world, that may not be nearly enough. It may less expensive, and more comprehensive, to increase that limit with an umbrella policy.
Second, an umbrella policy often contains broader coverage language.
In simple English, this means that some types of things that may be denied under your regular liability policy just might be covered under a broader umbrella policy.
That’s no guarantee of future coverage (I have to be careful here), but it’s sometimes the case. Umbrella coverage can sometimes operate as “gap” coverage. It’s worth discussing with your agent.
D&O insurance protects the board much like malpractice insurance protects a doctor from damages due to mistakes, or an insurance agent or accountant from accidental errors and omissions.
You might ask why that benefits the association. Simple. The cost of defending the board from a lawsuit will typically be passed on to all the association members according to the CC&Rs (the governing documents everyone in the association is bound by).
Read the exclusions. Ask questions.
This type of coverage can vary greatly between policies and carriers. As it is in recipes, so it is with insurance. The devil is in the details. And the details are often found in the exclusions section of a policy. Always go through it carefully with your agent.
Flood insurance
We know how wet it can get in Napa, Calistoga, St. Helena, Yountville, American Canyon and Sonoma. The question to ask your agent is... do we need to consider flood insurance? Don’t assume the answer.
Sewer drain backup coverage
A close cousin to flood insurance is sewer backup. Part of preparing your HOA coverage package is to discuss all of the what-ifs with your agent.
Employee-related coverages
Even if you have only one employee, and even if they are part-time, you need to discuss optional coverage that would cover employees and their actions.
You and your agent can discuss Crime Coverage (which can protect against employee dishonesty), Workers Compensation and Employment Practices Liability, to name a few.
Earthquake insurance
This is often called Differences in Conditions Coverage. It’s optional (if offered). But it should be on the discussion list when preparing the recipe for your final HOA insurance package.
Commercial auto coverage
When you or an employee drives a personal vehicle on an association business-related errand, the association could be held liable for an accident. Discuss this scenario ahead of time.
As always...
Make sure you sit down with a local agent who has your best interests at heart. They can take the time to make sure the recipe for your homeowners association insurance is exactly what you need.
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