Homeowners’ associations (HOAs) in Texas condominiums often face insurance requirements shaped by governing documents, local weather and building costs. Since HOA policies protect shared property, coverage gaps can be costly.
Even with a master policy, key protections and specialized coverage are often overlooked. Identifying these risks early can help board members adjust insurance protections to align with the community’s real-world concerns.
Ordinance or law coverage
Ordinance or law coverage helps pay to rebuild, repair or upgrade property to meet current building codes after a covered loss like a fire or storm. This type of insurance generally covers code-upgrade costs after partial or total damage.
This insurance also covers extra rebuilding costs needed to meet updated laws and building codes. HOAs may need this coverage if the condominium is older and requires major repairs and upgrades to meet today’s standards.
Directors and officers (D&O) liability
Many HOAs are usually run by volunteer board members who make key decisions for the community. Sometimes, a director or officer can be sued, even for a well-intentioned decision.
Having D&O insurance can help protect leaders from paying out of pocket if they face lawsuits for actions taken while serving on the board. Coverage includes legal fees and possible settlements so board members can make decisions without risking their personal finances.
Sewer backup insurance
Sewer backup coverage for HOAs pays for damage caused when sewage or water backs up into a shared building. Additionally, it may help cover cleanup and repairs to the sewer line up to the city connection. Common causes of sewer backups include:
- Clogged pipes
- Tree roots
- Old plumbing systems
- Damaged lines
- Sump pump failure
Standard policies typically do not include this protection, but the HOA can opt to add special riders that include sewer backup in the coverage limit.
Shielding the community from the unexpected
Navigating insurance contracts often requires careful review and knowledge of state regulations. A lawyer can help HOA leaders meticulously review their existing policies and identify hidden exclusions that need amending. Ensuring that plans provide maximum coverage can help safeguard the collective investment of every homeowner.