Homeowners associations and property owners associations in Texas can come in many different shapes and sizes – with different goals, preferences and procedures. However, one thing that is almost a universal truth for HOAs and property owners associations is insurance. So, what is the role of insurance with your association?
Insurance for HOAs
Insurance needs can vary, but perhaps the primary role of insurance for these associations is to help them cover defense costs if they are sued for some reason. For example, many residential neighborhoods that have HOAs have swimming pools or playgrounds. If someone were to suffer an injury in one of those common areas, that injured person might try to sue the HOA, for whatever reason. The claim can be forwarded to the insurance company, at which time it is common for the insurance to fund the defense.
But, there will also need to be insurance for the physical structures or areas that the HOA or property owners association controls. For a condo building, for example, there will likely be insurance coverage for the roof or in case of other exterior damage, possibly damages caused by natural disasters – which would not be covered by the insurance policies of individual condo owners in the building.
If you are part of the leadership team with an HOA or property owners association, you will need to become familiar with your existing insurance policies and the potential for other insurance needs. Oftentimes, associations find it helpful to get help with the legal details of insurance coverage, policies and claims.