Insurance: A Must-Have or Couldn’t Hurt? Making Smart Yet Affordable Coverage Decisions

From equipment failure and personal injuries to tornadoes and tropical storms, disasters happen, and any condominium association worth its salt knows that it needs to be prepared for a rainy day. Actually, even the most disreputable association worth zero salt is aware of this. And a great chunk of said preparation consists of insurance.

But with a vast array of coverage plans available at an equally expansive array of costs, how can a board decide what its community absolutely needs, what could be useful but isn’t a must-have, and what is entirely superfluous? Florida is famous for hurricanes, but earthquakes seem unlikely. California has the opposite problem. So some decisions are no-brainers. Others can keep a responsible board member up all night. Fortunately, there are kindly experts and thorough resources about that can help alleviate a board’s insurance-based woes.

Bare Bones

There are certain types of basic coverage that are more or less mandatory for a condominium association to obtain. Not because of any statute, necessarily, but because to do without would be entirely reckless, and open a board up to all types of strife down the line. The main two, according to Adam S. Collins, CIC, CIRMS, of Ian H. Graham Insurance—a major national firm with offices throughout the U.S., Canada and in Europe—are directors & officers insurance and general liability insurance.

“Directors & officers insurance is typically required in an association’s governing documents, but, if it isn’t, and the board members don’t have a policy in place to protect themselves, then they can be held personally liable regarding certain decisions,” says Collins. This coverage basically keeps the board safe from unsubstantiated claims of wrongdoing by residents for its day-to-day decisions; i.e. anything from what landscaper to hire to which ailing part of the property to fix first.

General liability insurance is often referred to as “slip-and-fall” by those in the know, as it covers an association should anyone get injured while on the premises. This type of insurance can also be a godsend should anyone attempt a fraudulent injury suit, saving a board from all sorts of legal and financial headaches.

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