#1. Insure Against Risk
. Associations have duties related to insurance that include purchasing and maintaining insurance policies against a variety of risks. What to insure and at what levels are determined by the association's governing documents, statute, and prudent business judgment. Following are common types of insurance carried by associations:
#2. 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.
#3. Tender Claims
. Whenever there is a claim or potential claim
against the association (someone slipped and fell on the property, a
pipe burst and flooded units and the common areas, etc.), the board
should immediately report or "tender" a claim
to its insurance carriers.
#4. Annually Disclose
. Associations have a duty to annually disclose
to their members a summary of the association's property, general
liability, and earthquake and flood and fidelity insurance policies.
: Associations needing legal assistance can contact us
To stay current with issues affecting community associations, subscribe to the Davis-Stirling Newsletter