The Ultimate Guide To Building/Property 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 Building/Property Insurance?
HOA Property Insurance, sometimes called building insurance or dwelling coverage, offers coverage for the physical components of a community association. It’s what will cover any property that the HOA or condo association owns from various types of peril. It is almost always sold as a package deal with Liability Insurance, so if your community is in need of a Building/Property policy, you will also need to consider your community liabilities for the bundled Liability Policy.
How is coverage determined?
There are a lot of moving parts involved when it comes to determining coverage levels for building/property insurance for HOAs. Coverage will be determined based on a few factors:
Water/sewer access points: Because a vast majority of property insurance claims are connected to damages caused by sewer and/or water backups, determining the coverage needed for potential water/sewer damage will be important. This coverage will be determined based on the location of water access points throughout the building being covered. For example, a 10-story condo building with in-unit washer hookups will need greater coverage than a 10-story condo building with a shared laundry center on the first floor, and no in-unit hookups or water access. The increased number of water access points, as well as the elevation of those access points, creates a greater chance of water damage throughout the building.
Percentage of permitted rentals within the community: Insurance companies will typically need to know the maximum number of potential tenets, and what percentage of those tenants can rent out their property. This is because owners are proven to take better care of the property than renters, as renters tend to be less cautious and can contribute to larger problems. Communities with high rental thresholds may not even be quoted for building/property coverage.
Ordinance and law coverage: This is where coverage can get a little dicey. Insurance policies are specifically worded to detail exact output. For building/property coverage, policies require that rebuilds (any kind of replacement or recreation of a portion of or a whole building that has succumbed to covered damages) match exactly what existed previously. While that doesn’t sound complicated, it is.
As society advances, we learn that some things, like building materials, are dangerous and should not be used even though they were used in the past (asbestos, for example). Because of this, states and local governments will enact restrictions on dangerous building materials or even building practices. If this has happened, and a covered building was originally built using now-prohibited materials, the insurance policy legally cannot rebuild.
This is because of “indemnification,” which means, “to make whole. If a rebuild were to use safer materials than the original building, it would legally be considered a betterment, which exceeds being “made whole” and is considered to be a form of gambling constituting insurance fraus.
To avoid this, HOA building/property coverage needs to include Ordinance and Law Coverage as a policy add-on.
What an HOA Building/Property Insurance Policy IS
What an HOA Building/Property Insurance Policy Is NOT
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What to Ask When Shopping for a Building/Property 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.
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Frequently Asked Questions
Buying Property 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 Building/Property 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.