Of the many things your association assessment pays for,
insurance is one of the most important. Association governing documents and
state law require the association board to purchase adequate insurance as part
of a comprehensive risk-management program. Our association has two types of
commercial insurance coverage—property and liability. Property insurance covers
loss of or damage to any common structures or physical property caused by fire,
flood, storms or other natural events. For instance, if high winds uproot a
tree that damages a common roof, the association’s property insurance would cover
the cost of repairs.
Property insurance may also cover what we call “human
perils” (such as theft) and “economic perils” (such as stock market
fluctuations) that might impact our association’s investments. Liability
insurance covers losses that would result if someone took legal action against
the association for an injury, financial loss or other type of damage. For
example, one important type of liability insurance, called Directors’ and
Officers’ insurance, covers volunteers like board and committee members so
they’re not jeopardizing their personal assets to serve the association.
The
association’s insurance does not cover owners or residents, their homes or
belongings. Each member should have his or her own insurance policy. If you
need information about homeowners insurance, talk to a licensed insurance agent
who specializes in homeowners associations. Or you may want to talk to the
association’s insurance provider; this person will know exactly where the
association’s master policy coverage ends and where yours should begin. This
prevents you from over or under insuring yourself.
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