How Much Liability Insurance Should an HOA Have?

Liability insurance for HOAs

There is a Minimum Amount of Coverage

Homeowners' Associations (HOAs), Condominiums and Planned Unit Developments (PUDs) are required to carry some amount of liability insurance. According to Insurancerate.com, "...associations also would do well to increase their coverage, as most carry only $1 million in basic liability coverage and $1 million in errors coverage for officers of the condo association..."

One Coverage Amount does not Fit All

How much HOA coverage is needed depends on the state/county the property is located in and what the current state law dictates, if it does. Not all condos, HOAs or PUDs are alike when it comes to coverage needs, but be assured, particularly if it is a financed property, that the mortgage company and/or lender will require a minimum amount where the law does not mandate it.

Bottom Line

Most, if not all, mortgage companies and/or lenders require the owners of financed properties to have a certain minimum amount of liability coverage built into the HOA Master Policy. If the property is not financed (i.e., mortgaged through a loan), a minimum amount of coverage of at least $1 million is still recommended.

References

• Real-Estate.Lawyers: Homeowners Associations and Insurance
• TimothyCline: Checklist for Obtaining a Quote for Commercial Liability Insurance
• CondoAssociation: Condo Association Insurance - Get your Master Property Insurance Quote Today
• Insurancerate: Who's Liable: You or the Condo Association?