Condominium and HOA Master Policy
Condominium Association Insurance
Condominium and HOA Master policy insurance is a special niche within the greater insurance business that demands particular knowledge of an insurance agent. Condominium and HOA master policy requirements are provided by the Condo or HOA documents. It takes special knowledge to read the docs and place the proper insurance as required by them for the Association. In many cases, Boards of Directors have great latitude to take care of Association business. Normally however, there is very little latitude given in what is minimally required by the docs. The documents use words like “shall” and “may” that have particular meaning. Misreading them can have dire consequences should a loss occur.
There are several different policies that normally make up a Condominium and HOA Master Policy. These include but are not limited to the following:
Property policy: This should be written on a special form policy whenever it is available for Condominium and HOA master policy insurance coverage. The special form covers everything except that which it specifically excludes. This is the broadest form of coverage generally available on standardized insurance policy forms. The property policy will generally exclude wind and flood on coastal exposed Condo Assn’s. These may be written on separate forms included below. This policy is the basis for determining all of the other property policies needed in writing condominium and HOA master policy insurance coverage.
Wind policy or Excess wind policy: In many coastal areas, there is an established wind pool which normally covers wind if it is excluded on the primary property policy. This wind insurance varies by construction type and distance to the water. Condominium and HOA master policy insurance programs may contain a layered approach to those structures with higher values.
Flood: Normally for Condo buildings this is written on the RCBAP policies. For Townhomes the RCBAP is not a valid policy type unless the units are actually owned like condos. In other words, if your deed describes dirt boundaries instead of referencing undivided interest in the common property only, then it is most likely not a condo. Whether your condominium and HOA master policy needs to include RCBAP flood coverage or dwelling coverage, SFI Group, Inc. is ready to help you.
General Liability: General Liability for condominium and HOA master policy coverage is the primary liability insurance policy which responds to claims made by injured parties who are injured on common property. The Assn GL policy will not have any exposure within the units of any owner. The owner must have their own liability in place for this. General Liability policies can be endorsed to cover Directors and Officers liability; however, the coverage afforded by endorsement is typically very minimal in nature. We never recommend endorsing a GL policy to include D&O coverage for condominium and HOA master policy insurance packages.
Directors and Officers Liability: Condominium and HOA master policy D&O coverage should always be written as a stand alone comprehensive policy for condominium and HOA master policy packages. These policies are generally much broader in coverage scope than a tiny endorsement to a GL policy. When looking at a D&O policy, you should verify the coverage includes full prior acts so as not to create a coverage gap for decisions made last year which cause a claim to be presented this year. There is so much to this policy type. Don’t get caught in the cheap trap. This is money wisely spent.
Umbrella policy: An Umbrella policy should extend over all of the Assn’s liability policies including: GL, D&O, Work Comp, Commercial Auto and any other liability policy which your Assn has in place. Typically, the Umbrella carrier will require the underlying carrier to have an AM Best or equivalent A rating with a financial size of VII or higher. If the underlying carrier does not meet the requirements of your umbrella carrier, the umbrella carrier will not extend coverage over that underlying limit. This is a very important but often overlooked issue. We recommend all of our condominium and HOA master policy programs include an umbrella policy. The cost is usually very minimal for the added peace of mind.
Fidelity Coverage: Most docs require the Board of Directors to supply Fidelity coverage commonly known as crime coverage to guarantee the monies paid by the members of the Assn have some assurance that their monies will be available when needed for common expenses. Additionally, Fannie Mae and Freddie Mac have certain requirements that need to be minimally met by Assn’s to maintain their status on the approved Assn master list. At SFI Group, Inc. we are intimately familiar with these requirements and how they apply to condominium and HOA master policy packages.
Let’s examine condominium and HOA master policy insurance needs separately.
Condominium Association Master Policies are designed to protect the common property of the association. As you may know, in the case of a condominium building, the Association owns all common elements and can be required to insure both the common elements and the limited common elements. There are some specific requirements of a master policy. These requirements are set forth by the Association’s organizational documents; namely, the Declaration of Condominium, the Associations’ Articles of Incorporation and the by-laws of the Association. Together with the laws which govern these types of ownership arrangements, they provide the outline of minimum coverage which is required of the Board of Directors of your Association. It would be grievously inappropriate of any agent to quote or write insurance for a Condominium Association, without first being familiar with your association’s documents.
At SFI Group, Inc, we have experienced agents who are familiar with the laws in the states in which we write insurance for condominium associations. The first step in obtaining a quote for your association is only a phone call away or you can submit your inquiry online and one of our knowledgeable staff will contact you by the end of the next business day.
I would like to commend the SFI Group and specifically Scott Wheeler. Scott has been handling the insurance needs of Queens Grant Condominiums and Townhouses in Topsail Beach, NC for several years. He has always done an excellent job in the assessment of our risks, the placement of our coverage and, when necessary, the initiation of claims.
As a diversified group, our 57 homeowners do not always understand the intricacies of insurance or the underwriting process. Scott has always made himself available at our annual meetings to explain the process and the coverages that apply to Queens Grant. He also remains after the business meeting to answer any individual questions that owners may have.
In two recent incidents, a lightening strike claim and a problem with the underpinning of one of our condo units, Scott worked with the adjusters through the claim settlement process while keeping our property manager appraised of the situation. The net result was that the claims were settled quickly and effectively with minimal effort on the part of our property manager.
When an individual property owner experienced problems with the insurance department of his mortgage lender, Scott willingly contacted the insurance department several times to assist in resolving the issue.
These are some of the examples of the superior customer service that we have come to expect from Scott. He is highly professional, dependable and customer centric. I would not hesitate to recommend Scott to any individual or firm seeking insurance services.
– Charles W. (Chuck) Esserwein
Chairman, Queens Grant Combined Boards
October 31, 2011
Homeowner’s Association Insurance (HOA Insurance)
Homeowner’s associations are similar to Condominium Associations, so we have put the information together on this page. There are; however, some real differences which require special attention. In many cases, a homeowner’s association has more flexibility to choose to insure the buildings contained within the association’s property (dwellings). In some they do not. It is of particular importance, your association’s Master Policy is properly written to protect the interest of the members of the association. At a minimum, your association should carry a General Liability, Director’s and Officer’s liability and some form of Fidelity coverage. There may also be some common property, such as a clubhouse or other common facilities which need to be protected with a commercial property policy.
At SFI Group, Inc. our staff of agents stands ready to help you wade through the intricacies of Condominium and HOA Master Policy insurance. Please call or click here to get your process started today. A response to your inquiry will be provided by the end of the next business day.