Homeowners associations (HOAs) are booming across the U.S. On average, 22 new HOAs form every day. HOAs generated revenues of over $36 billion in 2021. Insurance plays a key role in helping HOAs and PUDs (Planned Unit Developments) protect their communities.
Do your clients have the best combination of price, coverage, and service with their PUD or HOA insurance?
"HOA or PUD insurance isn't something for the association to purchase and then forget about," cautions Nicole Reed, Assistant Vice President and Product Manager, Philadelphia Insurance Companies (PHLY). "Making sure your HOA/PUD and property manager clients periodically review their exposures against changes that occurred in their community or in their CC&Rs [covenants, conditions, and restrictions] can help ensure there aren't any coverage gaps or misconceptions should the unexpected happen."
HOA insurance is like business insurance for associations. The association's or PUD's board or property manager purchases it to cover damages that can occur to amenities and common-use buildings, or on grounds that are the association's responsibility. The policy also covers liability if someone is injured while on the property or during an activity.
Association fees provide the money to purchase insurance for homeowners associations. This type of insurance doesn't cover residences, which personal lines insurance generally protects.
PHLY has been protecting HOAs and PUDs for over 25 years with customizable primary plans, including:
- General Liability with limits of $1MM/$2MM, $1MM/$3MM, or $2MM/$4MM.
- Property to cover physical damages in common areas that are the HOA's responsibility.
- Auto for owned, non-owned, and for-hire vehicles.
- Umbrella/Excess Liability with limits available pending underwriting review (these policies can also include Directors and Officers (D&O) coverage).
- Crime and Fidelity to cover incidents of employee dishonesty, such as stolen funds.
While these plans may seem straightforward, insurance companies may have different explanations of benefits. You and your clients should make sure you have no misconceptions over what plans cover, and that your clients have the coverage they need.
6 Common HOA Insurance Misconceptions
Misconception #1: Once you've purchased a policy, you're always covered when claims happen.
Insurance doesn't usually adjust automatically when circumstances change. For example, does the policy reflect recent amenity additions or new buildings? Has any work been done that might have affected a warranty? It's wise to think of the policy whenever things change to ensure the coverage protects HOAs as intended.
Misconception #2: CC&Rs don't need regular review.
"If an HOA hasn't checked their CC&R recently, it should be reviewed to make sure that it is current with any changes within the community," explains Michael Palladino, Underwriting Manager at PHLY. "Then, once that document is up-to-date, it's a good idea to compare it to their insurance to ensure the coverage matches their needs."
Misconception #3: An umbrella policy always covers both General Liability and property damages.
The umbrella policy mostly covers General Liability and sometimes D&O. Associations want to make sure they have adequate property coverage in place.
Misconception #4: HOA insurance can't be used for a blanket HOA master policy over sub-associations.
PHLY can use its HOA insurance as a master policy acting as an umbrella over sub-associations to cover all the sub-associations' main amenities.
Misconception #5: HOA insurance is standardized.
"We know that no communities are identical. That's why we've made our coverages flexible, to customize for an HOA's exact needs," says Reed. "Our experienced real estate underwriters are both regionally and nationally located, so they bring an acute understanding to the situations facing the communities we insure." Customization also helps fit policy premium costs into the HOA's budget.
Misconception #6: HOA insurance has a long approval process.
At PHLY, we want to make sure these communities are protected. That's why, assuming we receive all the necessary information, we can process most quotes within 24-48 hours. (Timing can vary for larger, more complex HOA accounts.)
The PHLY Difference
With more than 60 years of protecting 120 specialized niches, PHLY understands the unique needs of HOAs. An A++ (Superior) rating by AM Best shows our commitment to financial stability. And with a customer satisfaction rating of 96%, we're proud to know our customers are getting the service they deserve and want.
Looking to submit HOA business today? PHLY's HOA Portal was designed to further increase the speed, security, and ease at which agents can submit HOA business. To access, simply log in or create your MyPHLY account, click on "New Business Submissions and Quotes" in the left-hand navigation, and select "Homeowners Association" under "Electronic Applications".
If you have any questions, contact a PHLY rep today.
