Property/Casualty Insurance:
For everything located on the property except the contents of the units, including the building. Usually covers damage to interior walls, floors and ceilings within units, but may not cover damage to cabinets, plumbing and electrical fixtures, appliances, wall and floor coverings, and built-in furniture. Basically, what it would cost to rebuild the structure.
Building Ordinance & Law:
If your older property suffers a substantial loss, the Building Property overage will only pay for what it would cost to rebuild the same exact building, in the same exact way. If the costs related to rebuilding and meeting new construction guidelines has increased since the initial construction of the building, Building Ordinance & Law coverage will cover these costs.
Sewer and Drain Backup:
Sewer and Drain Backup are the second most common water losses affecting most properties. This policy option is not usually included in your Property insurance, but can be added upon request. It will cover water that backs up through a sewer or drain, or water below the surface of the ground including water that exerts pressure on or flows, seeps, or leaks through or into a covered building or structure.
General Liability Coverage:
Covers the association and sometimes its members for personal injuries, bodily injury and property damage to third parties. This policy may also cover liability for defamation, advertising injury, non-owned automobile accidents, employment practices, and similar additional coverages. All general liability policies contain a number of important exclusions that must be considered in assessing the validity of a claim.
*** The law states that if certain minimum statutory policy limits are met, the individual owners cannot be held responsible if damages exceed the coverage. The statutory minimum is $2,000,000 if the project consists of 100 or fewer units or lots, and $3,000,000 if the project consists of more than 100 units or lots.
Hired and Non-owned Auto Liability:
If you cause an accident or an injury to someone while you are driving a rented car or “non-owned” vehicle, or if you have an employee run an errand using his or her own car the association will be covered for damages to a third party.
Directors’ and Officers’ Liability:
This coverage is to protect honest directors and officers from liability for mistakes unless their actions are self-interested, unreasonable or negligent. Directors are entitled to rely on information and opinions provided by the association’s officers, committees, and hired experts.
***The law states that if the D&O insurance meets statutory minimums, the director of officer cannot be held personally liable even if the damages exceed the insurance coverage. The statutory minimum is $500,000 if the project consists of 100 or fewer units or lots, and $1,000,000 if the project consists of more than 100 units or lots.
Fidelity Bond:
Also known as Employee Dishonesty and/or Crime Policy. Fidelity coverage provides protection for loss of money (i.e. reserves or operating funds, additional securities and property that arises from the fraudulent or dishonest acts of those defined as persons handling the association’s money). Most associations’ governing documents require this coverage. The suggested amount of coverage is equal to 3x monthly assessments + the average amount of reserves held at any given time.
Workers’ Comp:
Required by the State of California for associations with employees. Covers the medical services for employees that are injured while performing their job duties. Because most Property/Casualty insurance exclude employees and volunteers can sometimes be considered as employees, a Workers’ Comp policy for employees and volunteers is strongly suggested.
Earthquake:
Earthquake insurance is not typically part of the property/casualty policy. It is obtained by an additional policy or endorsement at additional expense. However, property insurance generally provides coverage for damage caused by fires started by earthquakes. Most governing documents do not require earthquake insurance, and it is not required by law.
Disclosure Statement:
Policy descriptions are based on information provided by the California Condominium Bluebook, and other CID educational materials. These are general descriptions designed to help guide board members and managers in making better more educated decisions when shopping for HOA insurance. Not all policies are the same and not all policies are equivalent to the descriptions stated above. Please check your actual insurance policy before renewing or purchasing new HOA insurance.