What you should know about insuring a Homeowners Association in Colorado
Are you a property manager looking for competitive HOA insurance? Are you having difficulty finding affordable Property and Liability coverage for your HOA? Are you concerned about high Wind and Hail deductibles creating risk exposure for your association?
Wind and Hail Deductibles
All Colorado insurers have implemented percentage-based deductibles for wind and hail claims when total insured value exceeds $3 million. This is a significant concern for larger homeowners associations in the state.
Are Lower Deductibles Available?
Lower deductibles are available only when the total insured value falls below the $3 million mark. For associations above that threshold, percentage-based deductibles are standard across all carriers.
Can the HOA Purchase a Deductible Buy-Down Policy?
Yes, deductible buy-down policies are available but can be expensive. They are recommended for larger associations that want to reduce their out-of-pocket exposure on wind and hail claims.
Is the Wind/Hail Deductible Per Building?
Yes, the deductible applies individually per building. For example, if three buildings in your association need roof replacement after a hail storm, the percentage deductible is triggered only on those three structures, not on the entire insured value of the association.
Does Workers' Compensation Cover Volunteers?
Workers’ compensation does not cover volunteers. However, Pinnacol offers an affordable HOA workers’ compensation policy at around $500 per year. This coverage is important because it protects the association against injuries from uninsured contractors working on the property.
Does D&O Cover the Property Manager as Well as Board Members?
Directors and Officers (D&O) insurance should protect both board members and the property manager. However, some policies may exclude property managers, so it is important to verify that your policy extends coverage to all parties managing the association.
Is an Umbrella Policy a Good Idea?
Absolutely. A minimum of $1 million in excess liability (umbrella) coverage is recommended for all homeowners associations. This provides an additional layer of protection above and beyond the standard liability limits.
Crime and Fidelity Insurance
Colorado law mandates that HOAs carry crime and fidelity insurance coverage equal to two months of current assessments plus reserves, or a higher amount if specified in the association’s bylaws. This protects the association against theft and fraudulent activities.
Loss Assessment
Individual unit owners should carry HO-6 policies with a minimum of $5,000 in loss assessment coverage. This protects individual owners from special assessments that may be levied by the association to cover losses not fully covered by the master policy.
Carriers We Offer Coverage Through
We offer HOA insurance coverage through several major carriers including Travelers, United States Liability Insurance, Markel, Scottsdale, Liberty Mutual, Nationwide, and others. Having access to multiple carriers allows us to find the most competitive rates for your association.
Coinsurance Penalties
THIS IS AN IMPORTANT ERRORS AND OMISSIONS CONCERN. Undervaluing replacement costs can trigger coinsurance penalties. For example, if a property has a replacement cost of $1,000,000 with an 80% coinsurance clause but is insured for only $750,000, the association will face an underreporting penalty at the time of a claim. It is critical to ensure that insured values accurately reflect current replacement costs.
Equipment Breakdown Coverage
Equipment breakdown coverage is included within your building limits. This covers the repair or replacement of mechanical and electrical equipment such as boilers, HVAC systems, and other essential building systems.
If you are looking for competitive HOA insurance in Colorado, please contact us for a quote. We would be happy to review your current coverage and provide options that best fit your association’s needs.