To wrap up the last part of this series, I want to focus our attention to some of the most important coverages not yet discussed as it relates to your HOA… Directors & Officers (D&O), Crime, and Workers Compensation Insurance. While these coverages are sometimes discussed as ancillary, our opinion is that these are just as important as any other insurance you buy.
D&O coverage is meant to cover actions and decision made by the elected officers of your association. The concern is that your associations officers can be held liable for their actions and decisions while acting in that capacity. This can be somewhat surprising to most board members as they are often acting in what they think is the best interest of their community. Regardless, while serving on a board or even after your term is over, you can still be held liable. This is where D&O coverage comes into play. Without this important coverage, you could be held personally liable in the event of a lawsuit. This means your personal assets would be the only potential remedy source.
The need for crime insurance stems from the potential for association officials dishonesty or the dishonesty of others in the handling of escrowed funds to be used for association purposes. Say, for example, a board President “mismanaged” $100,000 of association funds. Crime insurance would be the place you’d need to look for reimbursement of those funds to your association. Otherwise you’d have to recover the money through an assessment, personal reimbursement, etc. One important recommendation I give our clients is to NEVER… I repeat NEVER… lower your crime insurance limit. I know funds can change year to year and the desire to save money today can lead some associations to lowering this limit. DON’T! It can take years for these types of losses to become realized and lowering your limit of insurance can negatively affect your ability to recover the full amount you are owed.
Workers Compensation is sometimes debated in the association realm as a needed coverage for a few reasons. We feel that it extremely important for all associations to carry this coverage. And we have the experience to back it up! One of our association clients had a non-board member volunteer who was doing approved work for the association and needed to use a ladder. In performing this work, the ladder slipped on a piece of moss and the volunteer fell, injuring his back upon impact. The associations Workers Compensation insurance covered the volunteers medical bills. Also, had this claim been more severe it would have covered their lost wages, pain and suffering, etc.
Associations also need to be concerned with who they hire to perform services for their association. One of our clients hired a pressure cleaning company to clean their roofs and buildings. This company’s usual staff was otherwise occupied, so they decided to hire a day laborer, who was not covered under their insurance. A few days after completing the work, this day laborer claimed he fell off the roof causing him to become injured. Since the association had no proof this did or did not happen, they were responsible for paying a percentage of the injured day laborers medical bills.
As you can see, there is a lot to think about when it comes to properly insuring your association. This is why having a team of consultants with decades of association specific experience is of paramount importance to the prosperity of your association. Let us help you find the necessary solutions. You can do so by:
- Signing up for our upcoming webinar
- Scheduling an appointment with one of our consultant
- Engaging with us on this blog, Facebook and LinkedIn
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Written by Robbie Korth
If you have any questions, please feel free to contact Robbie Korth at firstname.lastname@example.org