The Ultimate Guide To Liability Insurance for HOAs in Utah
Even though insurance is becoming a vital necessity for many, it’s a very complicated and confusing industry, especially for buyers. As a premium agent of high-quality insurance providers, Looshki is making a dedicated effort to uncomplicate some of the most important insurance information that policyholders should know. These tips and explanations are designed to offer a general understanding of insurance, and if you have specific questions about purchasing new insurance, or about a policy you currently hold, we encourage you to call us (or a local, trusted insurance agency if you’re outside of Utah) and let us go through all of your needs to make sure you’re completely covered.
What is HOA Liability Insurance?
An HOA liability insurance policy is designed to protect community associations from lawsuits stemming from physical liabilities within the community association. This policy covers a set physical area and is often purchased in a bundle with building/property insurance for communities that have buildings to protect, such as condo associations and townhome communities. Liabilities are any physical hazards that exist within the policy’s covered area.
Trip/slip and fall hazards of all kinds, including but not necessarily limited to slip and falls in stairwells, pool areas, sidewalks, and parking garages, as well as weather-related hazards.
Example: If an area of sidewalk that is uneven has been covered by snow causes someone to trip and injure themselves, that person could sue, and the community could be protected with the proper HOA Liability coverage.
Who can be covered: This policy provides coverage to the community in the event of a lawsuit stemming from injuries caused by physical hazards. Coverage is set based on the physical community and protects from lawsuits served by anyone, not just residents of the community.
Example: Someone walking on a community sidewalk trips, falls, and breaks their arm. Even though they do not live in the community, they are covered by the community’s Liability policy, so that when they sue for compensation, insurance will pay, not the community.
Hazards exist everywhere, including in your community. Protecting your community’s financial stability with liability coverage is a necessity. Even if your governing documents do not require liability coverage, it is an important policy to have. And for condo and townhome communities that require building/property insurance, most insurance providers will not sell one without the other.
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What an HOA Liability Insurance Policy IS
What an HOA Liability Insurance Policy Is NOT
Building/Property Insurance is NOT the same as an Umbrella Policy. Umbrella coverage offers comprehensive liability coverage to the association, but does not include property or building damages.
Though HOA Liability Insurance can protect an association from lawsuits stemming from trip and falls caused by weather-related hazards, it does not replace earthquake, flood, or hurricane insurance coverage. For protection from loss and damages due to any of these natural disasters, your HOA will need to get a separate HOA policy for each, or will need to instruct homeowners in the community to obtain their own individual earthquake policies.
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What to Ask When Shopping for a Liability Insurance Policy for your HOA
When shopping for a policy, the most important thing to remember is that the possibilities are truly endless. Protection exists for just about every scenario you can imagine, and then some--the trick is to make sure YOUR policy names that specific protection. Each policy can have its own limits, deductibles, and limitations.
Unlike most insurance coverage determinations, liability coverage is determined by the insurance agent. So it will be important to discuss with your agent what your community’s primary focus is: cost-cutting, or abundant coverage. Coverage options are built buy pairing an Occurrence Amount with an Aggregate Amount, typically either $1/2mil, or $2/4mil, with the first amount representing your Occurrence and the second representing your Aggregate.
- Occurrence Amount: Your occurrence amount is the limit per time you're sued in the policy period. For example, let’s say a policy has an occurrence amount limit of $1mil. This means that the maximum amount any single lawsuit can pay out is $1mil.
- Aggregate Amount: Your aggregate amount is the total amount of money the association can pay out in total per policy period, and is typically double the occurrence limit. Using the last example, let’s say your policy’s aggregate amount is $2mil. If you’re sued twice and have to pay out $1mil each, the policy will only cover those two payouts–any additional lawsuits that require payouts will be the responsibility of the association. However, if instead you’re sued six times for $100,000 each, all six of those lawsuits can be covered by the policy because you’re staying under the aggregate limit.
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Frequently Asked Questions
No. An HOA Liability policy will only protect the community association, not individual homeowners or injuries resulting from personal property.
No, liability doesn’t cover a firewall. An actual fire is covered by property/building damage.
No. HOA Liability coverage only protects against physical liabilities. Defamation would potentially be covered by the community’s D&O policy.
HOA Insurance that protects the board from lawsuits is called Director’s & Officer’s Insurance, or D&O coverage.
No. HO-6 is a personal insurance policy for condo and co-op owners.
Probably not, because a service animal is typically owned by a single person and is considered personal property under the law. Even if the dog belonged to a board member, no lawsuit pertaining to the dog could be brought against the HOA–it would be brought against the owner.
An HOA Liability policy is NOT going to protect against any lawsuits stemming from cyber crimes. Specific cyber liability policies do exist and can be purchased as a separate, additional add-on. HOA Liability coverage is strictly for physical damages.
There shouldn’t be a difference because the liability coverage will come from outside the actual dwellings.
Buying Liability Coverage for Your Homeowners Association
Remember, this is a lot of information, but it only scratches the surface of what a comprehensive policy can do to protect your community. It is important that you seek out local professionals to go over any coverage you may currently have, the needs your community is most likely to face, and find where any gaps exist that can be filled before it’s too late.
If you’re looking for Liability insurance in the state of Utah, call Looshki today for a free consultation with one of our insurance representatives to learn more about how we aggregate only the best policy providers to fit your needs.
Why Choose Looshki?
There is a great irony that comes with choosing an insurance agent. In attempting to protect yourself from risk, you are taking a risk in which agency you choose. Like a soldier standing at the gates, insurance is your last line of defense, should the worst happen. And like those soldiers, if we fail at our job, it’s already too late by the time you find out.
At Looshki Insurance Group, we help mitigate your risk by working directly with you to understand your unique needs. We connect you with a wide range of major providers to find the policy that best meets your needs (and your pocketbook). If you have any issues, we are your primary point of contact, working tirelessly as your advocate to make sure you are taken care of.