QUESTION: How can a Board, manager or homeowner hold the HOA insurance provider accountable once a claim is made against the HOA/COA, Board and/or management company? (i.e. making sure they respond in a timely fashion, making sure they assign the claim to a law firm familiar with HOA/COA laws, etc.).  Is it possible for a general clause to be added to the insurance contract that allows the association to pick who will represent them?

SUGGESTIONS:

Step 1: Know What You Are Buying And From Whom.It is important that HOAs/COAs purchase insurance from companies with solid reputations. A lot of frustration can be avoided if the Association simply knows what they are buying before they buy it. At a minimum, Associations should have a qualified Association attorney read through the policy to confirm that it covers exactly what you want.

Step 2: Don’t Get Burned! Keep Current. One Association attorney had to tell an Association that their policy only covered about $500,000 of the $3,000,000 recreational center destroyed in a fire. The association did not update their coverage when they made a $2.5 million dollar renovation. Ouch! As you can imagine, there were a lot of angry members. If you do anything that increases value in your community, make sure you adjust the insurance coverage.

Step 3: Negotiate The Terms You Want BEFORE You Sign The Contract. Some insurance companies allow you to pick the attorney you want to handle insurance claims. Oftentimes, this means you can keep issues with your current legal counsel. This is very attractive for anyone that does not want to risk a file being turned over to a dummy.

Step 4: Only Work With Association Industry Experts. Some insurance companies specialize in Community Association coverage. Others do not. The frustrations shared in the question above generally happen when the Association has insurance with a general provider. Many of the Association-focused companies have already dealt with these frustrations and implemented solutions to avoid them.

Step 5: Complain When There Is A Problem. Insurance contracts require that both parties act in good faith. This includes responsiveness. If the insurance agent or company is not responsive, let them know about it. Complain when your insurance attorneys stink. Insurance companies listen to problems when they know they could lose a good account when it is time for renewal.

Step 6: Get Rid Of Bad Eggs. I can never understand why Associations renew policies with companies they do not like. Many policies can be terminated at anytime without penalty. If you are not happy with your current insurance provider and are not locked into a prolonged contract, now is the best time to look. Do not procrastinate.

Step 7: You Get What You Pay For. Sometimes the least expensive is not always the best option. Enough said.

Original article, "HOA Insurance Pitfalls: Solutions and Suggestions" authored by HOA Institute - December 2nd, 2014 - HOA Board of Director Resources, Questions & Answers.