Can someone help with explaining the HOA insurance?

11 Replies

Hi, everyone,

I am a newcomer to this website and a brief introduction of myself: I recently bought one condo in florida and every month I paid HOA fees to one designated property management company.

According to the budget provided by property management company, half of the monthly fees go to the HOA's insurance. FYI, We are a small opencommunity of 16 condos, no swimming pool nor gated entrance.

I requested to have HOA's insurance for my reference, so that I can buy my condo owner's insurance properly. After reading through the HOA's insurance's policy, I found that the policy is called "Business Owner's Policy" and below is the summary page of the policy:

"General Liability

GeneralAggregateLimit(OtherThanProducts-CompletedOperations) $4,000,000

Products-Completed Operations Aggregate Limit $2,000,000

Personal And Advertising Injury Limit INCLUDED

Each Occurrence Limit $2,000,000

Fire Damage Limit $50,000 PER OCCURRENCE

Medical Expenses Limit $5,000 PER PERSON


Nonowned Auto INCLUDED

Accounts Receivable $25,000

Employee Dishonesty $10,000 PER OCCURRENCE

Electronic Media and Records $10,000

Fine Arts $10,000

Money & Securities $10,000 Inside/$2,500 Outside

Valuable Papers and Records $25,000"

One quick question is that how i can tell if this is an appropriate HOA's insurance. Many coverage items are irrelevant to our HOA. The insurance agent just explained that this is a generic term.

Can anyone know if i can believe what the insurance agent said or I am supposed to dig further. Does anyone know if there are any minimum requirements in Florida for HOA's insurance. I found other condo's HOA's insurances has 3 separate insurances out there:

1) director and officer's general liablity

2) property insurance

3) crime insurance.

Thanks in advance for your kind attention and any hint or clues will be greatly appreciated.

If there are very few common elements that the association is responsible for, it's not unusual for insurance to be a good part of the fee.  If they're responsible for the structure, roof, janitorial, common area utilities, HVAC, etc. then that doesn't make a whole lot of sense unless they've filed several claims and have high insurance rates.  

Every insurance company sets their policies up differently and policies by similar names may have very different coverages from different companies.  Generally, there is a liability policy, umbrella policy, property policy, and fidelity bond/crime.  You need to check your bylaws to see what's required. 

Frankly, unless you're on the board, don't expect the insurance agent or management company to be overly helpful in answering your questions as they relate to the common area.  The board is in place to make these decisions and oversee that all services provided are adequate for the building.

HOA is rather generic. Are these condos, PUD's, TIC's or another type of common interest association. The type makes a difference. Is each unit frees standing , common wall, single story, common area i.e. grounds? Do you own air space or the lot and structure? All those are possible and make it difficult to answer the questions you ask. You HOA docs CC&R's should provide you with the information needed though.

Small developments generally have higher expenses because there are fewer units to split the cost.

If you bought a condo, you're a member of the COA, not an HOA. If it's a condominium, they will have insurance on the building, as the COA owns the actual structure. If it's a fee simple town home/house, then the HOA won't.

@ Martin Scherer,

Thanks for your post. Actually our condo's association consists of 4 buildings, which are . Each building has 4 townhouses. In total, there are 16 units of townhouses.

Because it is a small organization, 3 board members seem not to make any decisions and they totally rely on the property management company. I asked one board member if she knew what is HOA's insurance coverage. To my surprise, she said that she didn't know those and she don't know where to find the insurance policy. she only knows that the property management might have one. Unfortunately, the HOA documents didn't specify which coverage should be like. It only specifies how to use the fund from filing an insurance claim after there is any damage or natural disasters.

The board members shared with me that the majority of the unit owners are NOT interested in HOA's matters and no one showed up last year during annual meeting. Even those 3 board members don't talk with each other until the annual meeting. If they have anything in their mind, they just contact Property Management Company for the execution. On most occasions, they just "MADE" their decisions and didn't inform the unit owner unless being asked.

@Pita Lucas If you want to PM, or share it here, the address, no unit numbers necessary, I'll look up a couple of basic things.

It does not look unusual for the part that you have posted.  To be fair you only posted the General Liability, a bit of Inland Marine Coverage, a small amount of crime coverage no property coverage and no directors and officers coverage.  If I had to guess, there is more to this policy than you are showing on your post. 

For what is being shown, it looks pretty standard and certainly not overdoing it. 

It would appear you are in FL, the state of outrageous insurance rates, so the fact that it takes up most of the budget also seems usual as the COA would cover the shell of the building, which is what would be hit first in the case of a hurricane (the real worry).

@ Derek,

Thanks for your professional answers above. Yes, you are right and i just showed the first summary page of the coverage. There are other items in this policy. The insurance agent also told me that there were any separate policy which is to insure the board member to be sued. In addition, some of the units are in Flooding Zone and there is additional insurance for this as well.

I am a layman to the insurance and my further question is that the insurance is called "business owner policy" and many coverage items seems irrelevant to our COA, such as "Electronic Media and Records $10,000

Fine Arts $10,000

Money & Securities $10,000 Inside/$2,500 Outside

Valuable Papers and Records $25,000"

If my understanding is correct, can i think that our association is NOT insured properly?

@Wayne Brooks

Yes, the address is 3905 SW 26th Terrace Gainesville FL 32608. Thanks in advance for your help.

@Pita Lucas ,

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I literally joined this forum to answer this question, as I found it randomly on a search for something else.  Insurance for Condos and Single Family associations are dictated by two things 1.) The associations documents (most have a section dedicated to insurance) and 2.) state statutes.  See what the State of Florida minimum insurance requirements are for COA.  Generally, I've found that boards just take whatever insurance quote is the cheapest.  If your governing documents do not state what insurance the association requires, then the second place you need to look is at what common elements the association actually owns (typically listed under maintenance, or association responsibility).    Whatever the association owns needs coverage.

Directors & Officers policies are standard for any organization operating with a board of directors, flood insurance, and general liability are industry standard for coverages.  If the Association employs people via 1099 or W2, then the employee coverages are necessary.  These coverages that you mentioned: "I am a layman to the insurance and my further question is that the insurance is called "business owner policy"  --  These insurances are for if the Association maintains an office ON SITE.. I don't know what the "fine arts, money securities" would be for - I can't even begin to speculate.. But most of what you say seems like legit insurance.  And like what others have said, Florida insurance is ridiculously expensive.

I am a HOA Community Manager, and I thought I could provide some insight.

Run for the board and take some control from the manager

- also make sure your own home owners policy does not charge you for something that you are protected by already in the HOA policy. The fact that you only have 16 units is the major reason why it is such an big part of the expense. I'm the president of our HOA board and we only have 69 units in NJ and insurance is a still a huge part of our cost.

Our management company is great, but they know they work for us for sure.

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