A Condo-owners Association (or COA) is responsible for a lot. It’s in charge of maintaining the shared common areas of the condominium, such as walkways, swimming pools, parking areas, the grounds, and recreational areas – among their other responsibilities and duties. However, all of these responsibilities open the Condo-owners Association (or the board members in charge of the COA) to a certain level of risk. And that’s where COA insurance can help you – it can protect you from those risks. We’ll explain some of the common risks COAs face and how COA insurance protects you.
4 risks COAs face.
1. Property losses.
The Condo-owners Association is responsible for the buildings that are jointly owned by the members of the COA. They also may be responsible for amenities such as the swimming pool, the tennis courts, the recreation center, and so on. If a loss like a fire, wind damage, or hail damage happened, the COA would be the entity that had to get the affected structure repaired or replaced, but of course that will come at a cost.
The insurance solution: Property insurance.
Property insurance can cover the structures that are jointly owned by members of the Condo-owners Association. It can protect against losses like fire and lightning. Usually the bylaws of the COA will outline what is owned by the COA and how these buildings, amenities, or structures need to be insured.
Since the “common areas” of the condominium complex can be the responsibility of the Condo-owners Association, the COA could find themselves at the receiving end of a lawsuit if someone were to get hurt on the property. COAs could also be sued for property damage. Lawsuits happen all over the place in today’s society, where people sue over a lot of things. And if the COA gets sued, they could be facing legal expenses, court-ordered awards or judgements, or settlements. And all of those things get very expensive very quickly.
The insurance solution: General liability.
General liability can protect the Condo-owners Association if they face a lawsuit in which someone alleges that the COA is liable for causing them bodily injury or property damage. It can help the COA cover the legal expenses that they face, the settlement they face, or the judgement the court awards to the injured party. For example, someone could trip in the parking lot outside the tennis court and break their leg, then decide to sue the COA. That’s why general liability is an important part of the COA insurance you should consider.
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3. The board could get sued for discriminatory practices, mismanagement of funds, or failing to properly maintain the common areas.
Well, we’re talking about lawsuits again. This time we’re focusing more on the board of the COA, the people who actually make the decisions and who basically run the COA. (Even though all the condo-unit owners can be members if they pay their dues to the association, there has to be a group of people “in charge” of fulfilling the COA’s responsibilities.)
Anyways, the COA’s board could get sued for a variety of issues. The could be sued for discriminating against condo-owners. Or they could be sued for mismanaging shared funds. They could even be sued for failing to manage the shared properties and areas in a responsible manner.
The insurance solution: D&O (Directors & Officers) insurance
D&O insurance can help defend a board member, director, or officer if they are sued for the situations we mentioned above. It’s important to evaluate the D&O risk that your specific COA faces and get the right policy to cover them.
4. Sticky-fingered employees or volunteers.
We want to think that we can trust the people who work for us and who handle the money. But what if an employee or a volunteer of the COA steals money from the COA – for example, dues of the COA members and money intended to be used for maintenance and repairs? That would be a problem. The Condo-owners Association could lose a lot of money if an employee decided to steal. Employee dishonesty insurance is something to consider as part of your COA insurance plan.
The insurance solution: Employee dishonesty insurance (Crime insurance)
The COA can get employee dishonesty insurance to protect itself against the possibility of an employee stealing. Along with getting employee dishonesty insurance, this risk can be mitigated by having a background check system and by dividing the financial duties so that one person doesn’t handle everything.
These are just four of the potential risks your COA might face. Each COA is different, though and that’s why it’s important to get the right COA insurance to protect association. Our team of insurance professionals can help with that. We can help you identify your risk and get the coverage you need to protect your COA from them. Get started with your quotes by filling out our online quote form or giving us a call today.