Florida Homeowners Association (HOA) Insurance

General Liability Insurance for Homeowners Associations

Homeowners associations can face liability claims involving common areas, association-owned property, community amenities, and association activities. For example, a resident, guest, contractor, or visitor could be injured at a clubhouse, pool, playground, sidewalk, recreational facility, or other property for which the association is responsible.

General liability insurance may help protect the HOA against certain covered third-party bodily injury and property damage claims, including applicable legal defense costs, subject to the policy’s terms, exclusions, and limits.

Associations with substantial common property, recreational amenities, community events, or significant visitor traffic should carefully evaluate their liability exposures and coverage limits.

Directors and Officers Insurance for HOA Boards

HOA board members make decisions involving budgets, assessments, contracts, vendors, enforcement of association rules, maintenance responsibilities, and community operations. Those decisions can sometimes lead to allegations of errors, omissions, breach of duty, improper governance, or other wrongful acts.

Directors and officers liability insurance, commonly called D&O insurance, may help protect the association and eligible directors and officers against certain covered claims arising from their management and governance responsibilities.

Coverage can vary significantly by insurer and policy, so exclusions, defense provisions, limits, and the definitions of insured persons and wrongful acts should be reviewed carefully.

Crime and Fidelity Protection for Florida HOAs

Homeowners associations may hold substantial operating funds, reserves, assessments, and other association money. Crime and fidelity coverage may help address certain losses involving theft, fraud, forgery, or dishonest acts, depending on the policy.

Florida law requires a homeowners association to maintain insurance or a fidelity bond for persons who control or disburse association funds. The coverage generally must equal the maximum amount of funds that will be in the custody of the association or its management agent at any one time. Florida law also provides a procedure allowing an association to waive the requirement annually when the required member approval is obtained.

Because association funds can represent substantial amounts of money, the people who have access to those funds and the limits provided by the policy should be reviewed carefully.

Wind, Hurricane, and Flood Risks for Florida HOAs

Florida homeowners associations can face significant exposure to hurricanes, tropical storms, wind, heavy rainfall, and flooding. An association should carefully review how its property insurance addresses windstorm and hurricane damage, applicable deductibles, exclusions, and any separate or specialized wind coverage requirements.

Flood is a separate exposure and should not be assumed to be covered by standard commercial property insurance. Associations responsible for clubhouses, community buildings, equipment, or other property in flood-prone areas should evaluate available commercial flood insurance separately.

Signs, fences, landscaping, pools, docks, outdoor property, and other community features may also have special limits or exclusions depending on the policy.

HOA Insurance vs. Condo Association Insurance in Florida

A Florida homeowners association and a condominium association are not the same type of organization, and their insurance responsibilities can be different.

HOAs are generally governed under Chapter 720 of the Florida Statutes, while condominium associations are governed under separate Florida condominium laws. The property an association is responsible for insuring can also differ based on the type of community and its governing documents.

For that reason, an HOA insurance program should be designed specifically around the responsibilities of the homeowners association rather than assuming the insurance requirements of a condominium association apply.

Other Insurance a Florida HOA May Need

Depending on the association’s property, employees, amenities, contracts, technology, and operations, additional insurance may include workers’ compensation, cyber liability, equipment breakdown, commercial umbrella, commercial auto, employment practices liability, and other specialized coverage.

Cyber liability insurance may be worth considering when an association or property manager maintains resident information, financial records, online payment systems, access-control systems, or other sensitive electronic information.

Commercial umbrella insurance may provide additional liability limits above certain qualifying underlying policies when the umbrella policy’s terms and underlying-limit requirements are satisfied.

If employees are hired directly by the association, workers’ compensation requirements and employment-related exposures should also be reviewed.

What Does HOA Insurance Typically Not Cover?

HOA insurance does not automatically protect every property or exposure within a community. Individual homeowners generally remain responsible for insurance applicable to their own residences, personal belongings, personal liability, vehicles, and other personal exposures unless the association’s governing documents establish different responsibilities.

Flood, certain wind exposures, normal wear and tear, deterioration, maintenance issues, landscaping, specific outdoor property, and other causes of loss may be excluded, limited, or require separate coverage depending on the policy.

Because association documents, property characteristics, and insurance responsibilities can vary, the governing documents and insurance program should be reviewed carefully when determining which property and exposures the association is responsible for insuring.