Umbrella Coverage

Does a HOA Need Umbrella Coverage?

In today’s world, homeowners’ associations are not immune to litigation due to accidents or other unfortunate scenarios. These entities have a responsibly to maintain grounds, buildings and equipment that fall under their jurisdiction. Sometimes members are driving vehicles on association business and could hurt someone. This is why community associations carry General Liability and Directors and Officers Liability insurance. Are those policies always enough?

Understanding Maximum Limits

Consider scenarios where serious injury or even death occurs within the community areas. It is not unthinkable that the association can be held liable depending on the circumstances. If that is the case, legal costs, medical bills and judgments can stretch into the tens of millions. Most General Liability and D&O policies only offer coverage of a few million.

HOA umbrella insurance fills the gap in coverage for these extreme situations. It is typically written in a similar fashion to other liability policies but it has a much higher maximum limit. These caps can be upwards of $50,000,000. Even if a judgment ends up being only half of that, the difference between the basic liability limits and that amount is staggering. Without umbrella protection, the HOA will be on the hook for the full value.

Community associations need to understand all insurance available in order to protect their members. An umbrella policy is an important part of that.