What's Not Covered by Most HOA Insurance Policies

HOA insurance policies are designed to protect your community from a wide range of risks, but it's important to understand that no policy covers every possible scenario.

As an HOA board member or property manager, familiarizing yourself with common exclusions and limitations can help you make informed decisions about your community's risk management strategy and avoid unexpected financial burdens. In this article, I'll discuss some of the most common types of losses and situations that are typically not covered by HOA insurance policies.

Wear and Tear and Lack of Maintenance

One of the most common exclusions in HOA insurance policies is damage caused by wear and tear or lack of proper maintenance. This means that if your community experiences damage or loss due to the gradual deterioration of buildings, equipment, or other assets, or because of a failure to perform necessary maintenance, your insurance policy likely won't cover the cost of repairs or replacement.

Examples of wear and tear and maintenance-related issues that are typically not covered include:

• Roof leaks caused by age or neglect
• Plumbing or electrical system failures due to lack of maintenance
• Structural damage caused by termites or other pests that could have been prevented with regular inspections and treatment

To minimize the risk of uninsured losses related to wear and tear and maintenance, it's important for your HOA to implement a comprehensive maintenance plan and budget for regular repairs and upgrades.

Intentional Acts and Criminal Behavior

Another common exclusion in HOA insurance policies is damage or loss caused by intentional acts or criminal behavior. This means that if someone in your community intentionally damages property or engages in illegal activities, your insurance policy likely won't cover the resulting losses.

Examples of intentional acts and criminal behavior that are typically not covered include:

• Vandalism or graffiti
• Theft or burglary
• Arson or other intentional property damage

While your HOA can't eliminate the risk of intentional acts or criminal behavior entirely, implementing security measures like access controls, surveillance cameras, and neighborhood watch programs can help deter these types of incidents and minimize potential losses. Further, remember that you should take out fidelity bond insurance to reduce your risk exposure within your HOA board.

Certain Types of Water Damage

While most HOA insurance policies provide coverage for sudden and accidental water damage, such as a burst pipe or overflowing toilet, they often exclude certain types of water-related losses. These exclusions can vary depending on your specific policy and location, but some common examples include:

• Flood damage (which typically requires a separate flood insurance policy)
• Sewer or drain backups (unless specifically covered by an endorsement)
• Slow leaks or seepage that occur over an extended period

To protect your community from these types of water-related risks, it's important to review your insurance policy carefully and consider purchasing additional coverage or endorsements as needed.

Earth Movement and Settling

Many HOA insurance policies also exclude damage caused by earth movement, such as:

• Earthquakes
• Landslides
• Sinkholes
• Settling or shrinking of soil

In some cases, you may be able to purchase additional coverage for these types of risks through a separate policy or endorsement. However, it's important to weigh the costs and benefits carefully and consult with your insurance partner to determine if this type of coverage is necessary for your community.

The Role of a Trusted Insurance Partner

Navigating the complexities of HOA insurance policies and exclusions can be challenging, which is why it's essential to work with a trusted insurance partner likeJanover Insurance Group. An experienced insurance provider can help you review your policy, identify potential gaps in coverage, and develop a comprehensive risk management strategy tailored to your community's unique needs.

Additionally, a knowledgeable insurance partner can provide guidance on how to minimize the risk of uninsured losses through proactive maintenance, risk transfer strategies, and other best practices.

Conclusion

While HOA insurance policies offer valuable protection for your community, it's important to understand that they don't cover every possible risk or scenario. By familiarizing yourself with common exclusions like wear and tear, intentional acts, certain types of water damage, and earth movement, you can make more informed decisions about your community's risk management needs.

Remember, the best way to minimize the impact of uninsured losses is to work closely with a trusted insurance partner like Janover Insurance Group, implement proactive risk management strategies, and regularly review and update your insurance coverage to ensure it continues to meet your community's changing needs. By taking a comprehensive, informed approach to risk management, you can help protect your HOA's financial well-being and provide a safer, more secure living environment for your residents.