Important Information for HOA Boards

Insurance Claims / History

Legitimate insurance claims that are material should be made so that homeowner associations receive funds to compensate for damages sustained. On the other hand, it Is Important to realize that questionable insurance claims can result in an HOA paying higher insurance rates for many years because denied claims can result in an insurance history report that attaches to the property for many years . Not even changing insurance companies will result in the elimination of an adverse insurance history because each new insurance company checks with the last insurance company regarding its history of claims.

The lesson is clear: possible insurance claims should be reviewed carefully by the board of directors before a claim is made. Where a claim is questionable, the possible gain must be weighed against the possible long term cost.

Insurance - Employment Coverage

If homeowner association has employees, the board should make certain that the association’s insurance policy has an endorsement for Employment Practices Liability (EPL). This insurance defends the association in employer-employee disputes involving the following types of actions:

• Wrongful Termination

• Sexual Harassment

• Discrimination

• Failure to Employ or Promote

• Wrongful Discipline

• Intentional Infliction of Emotional Distress

HOA boards should also ask for coverage against third-party claims. This protects the association if vendors or contractors sexually harass any of the association’s employees and/or members.