November 24, 2020

Clipboard with contract and a person holding a paper with "Insurance Policy" in the title

How to Shop for Condo or Homeowner Association Insurance

November 24, 2020


If you’re on the board for a condo or homeowner association, you know that budget season is upon us. As you go through contract services and other expenses, one of the important line items on your budget is association insurance. Here are some tips that will help you make the decision that’s best for your association.

Research State Requirements

It’s always a good idea to start your insurance search by looking into what your state requires for associations. Just like with any type of insurance, you’ll find a wide variety of options from property value and replacement to D&O liability and more. Make sure you understand the different types of insurance and that any insurance you’re considering will provide you with comprehensive coverage according to your needs. For example, getting property insurance is obvious, but have you considered plans that cover workers’ compensation and employment practices liability? This coverage is essential if your association employs a large staff.

Consult Governing Documents

Your decision-making process should also involve going over all your association’s governing documents. These documents usually include minimum requirements for insurance coverage, so make sure you’re adhering to all of these. Otherwise, you won’t be acting in the best interests of your association. You should always have enough property insurance coverage for 100% of your property’s replacement costs. Seeing how much comprehensive insurance costs can be painful, but it’s well worth it if there’s a fire or hurricane that destroys community property.

Analyze Costs

That being said, you’ll also want to be careful that you aren’t paying for unnecessary coverage. If you see that in the past your association has been paying for more coverage than it needs—and that isn’t required—now might be the time to scale back. This is especially true if you’re looking at the budget and it’s looking a little tight. Insurance is a safety blanket, so this is a decision you’ll need to make carefully. More coverage is typically better than too little coverage, but if you’re significantly overpaying, this is an area where you can save some money.

Compare Quotes

Once you’re armed with the details of what coverage you need, you can start applying for association insurance. When filling out applications, make sure you include all your past claims. This information can easily be found, so you’ll need to be completely truthful and thorough about it.

You should always shop around instead of committing to the first policy that comes along. Get multiple quotes from different insurance companies. When you compare quotes, don’t look at cost alone. You should factor their experience and the customer service the company provides into your decision as well.  You may also be well served to require disclosure of any financial relationships between your management company and the competing insurance carriers.

Add Another Layer of Security to Your Association with LM Funding

One thing that association insurance won’t cover is the cost of delinquent fees and the associated legal expenses. Luckily, you can get this service from LM Funding! We protect associations from going in the red with overdue fees. Learn more by getting in touch today.

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