Insure Against Risk
Associations have duties related to insurance that include purchasing and maintaining insurance policies against various risks. What to insure and at what levels are determined by the association's governing documents, statute, and prudent business judgment. The following are common types of insurance carried by associations:
Seek Professional Guidance
Because board members are not experts in insurance coverage, they need to consult experienced insurance agents/brokers who specialize in providing insurance to common interest developments. The agent needs a copy of the association's governing documents so he/she can determine (i) the types of insurance required by the documents, (ii) whether "bare walls" or "all-in" coverage is required, (iii) whether "occurrence" or "claims made" is best, (iv) whether admitted or non-admitted carriers should be used, and (v) the appropriate levels of insurance needed.
Tender Claims to Insurance
Whenever there is a claim or potential claim against the association (e.g., someone slipped and fell on the property, a pipe burst, and flooded units and the common areas), the board should immediately report or "tender" a claim to its insurance carriers.
Annual Disclosures
Associations must annually disclose to their members a summary of the association's property, general liability, and earthquake and flood and fidelity insurance policies.
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