Community Association Insurance – What You Need to Know

Community association insurance is an important aspect for communities that have shared properties such as condominiums, townhouses, and gated communities. These properties require special insurance policies that are designed to protect the community association and its members from potential risks and liabilities. In this post, we will discuss community association insurance and what you need to know about it.

What is Community Association Insurance?

Community association insurance is a type of insurance that is tailored for communities that share common properties. This type of insurance policy provides coverage for shared structures, amenities, and other property that are owned by the community association. It also provides coverage for potential liabilities that may arise from events that happen within the community.

Community association insurance policies typically cover the following:

• Common areas, such as elevators, hallways, and swimming pools
• Shared amenities, such as fitness centers, clubhouses, and parks
• Liability for accidents that occur on shared properties
• Legal defense fees for lawsuits related to the community association

In summary, community association insurance is designed to protect both the community association and its members from financial losses that may arise from events that happen within the community.

Types of Community Association Insurance Policies

There are several types of community association insurance policies that are available on the market. The most common types of policies include:

1. General Liability Insurance – This type of insurance policy provides coverage for bodily injury, property damage, and personal injury claims that may arise from events that happen within the community.
2. Directors and Officers Liability Insurance – This type of insurance policy provides coverage for directors and officers of the community association from potential legal claims related to their actions or decisions made on behalf of the association.
3. Property Insurance – This type of insurance policy provides coverage for damages or losses to the community association’s property resulting from theft, vandalism, or natural disasters such as fire or floods.
4. Workers’ Compensation Insurance – This type of insurance policy provides coverage for employees of the community association who may be injured while performing their job duties.

Community associations may choose to purchase one or more of these insurance policies depending on their specific needs and requirements.

Why is Community Association Insurance Important?

Community association insurance is important for several reasons:

• It protects the community association and its members from financial losses that may arise from events that happen within the community.
• It provides peace of mind to community members that they are adequately protected from potential risks and liabilities.
• It is often a requirement for obtaining a mortgage on a shared property within the community.

Without proper community association insurance, community members could be left financially responsible for damages or losses resulting from events that happen within the community. This could result in significant financial burdens for community members and could potentially lead to lawsuits and other legal issues.

FAQ

What is covered under community association insurance?

Community association insurance typically covers common areas, shared amenities, liability for accidents, and legal defense fees for lawsuits related to the community association. However, specific coverage can vary depending on the insurance policy.

What is not covered under community association insurance?

Community association insurance typically does not cover damages or losses to individual units or personal belongings of community members. It also does not cover intentional acts of damage or injuries caused by community members.

What happens if a community lacks community association insurance?

If a community lacks community association insurance, community members could be financially responsible for damages or losses resulting from events that happen within the community. This could result in significant financial burdens for community members and could potentially lead to lawsuits and other legal issues.

How much does community association insurance cost?

The cost of community association insurance can vary depending on several factors, including the size of the community, the location of the community, and the specific coverage needed. It is recommended that community associations consult with an insurance agent to obtain a quote for their specific needs.

Is community association insurance required?

Community association insurance is often a requirement for obtaining a mortgage on a shared property within the community. However, requirements can vary depending on the specific mortgage lender and the type of property.

Conclusion

Community association insurance is an important aspect for communities that share common properties. It provides protection for both the community association and its members from potential risks and liabilities. By understanding the different types of insurance policies available and the coverage they provide, community associations can ensure they are adequately protected from potential financial losses.