Associations Insurance FAQ. Associations are a collective group of members with similar or related interests or goals who join together to form an associated group. Their purpose is to pursue those interests.
The interest may be entertainment or financial in nature. Some may be formed to perform public service or to assist a charity, while others are educational in nature and were formed to inform or advance a particular philosophy, religion, trade, political or social issue. Some associations have extensive tangible assets while others have none.
Because associations are not immune to litigation, liability coverages often represent their greatest insurance need.
We wanted to provide a deeper dive into small business insurance to help our readers get a better understand of the commercial insurance policies they want and need with the Associations Insurance FAQ.
Read the Associations Insurance FAQ to learn what type of commercial insurance coverages are right for your association - including liability, property, workers compensation and other specialty policies.
According to Webster's Dictionary, an association is, "an organization of persons having a common interest."
Associations include - but are not limited to - the following types of organizations:
You can reference the Insurance Definitions, Dictionary And Glossary to better understand the commercial insurance policy terms and language used in our Small Business Insurance FAQs.
Following are some suggested commercial policies and coverages applicable for associations:
Package policies are the most convenient way to combine coverages. Even when an association does not need property coverage, a package policy can still be used as a way to conveniently combine liability, crime and inland marine coverages.
Associations often do not qualify for a businessowners policy, either because there is no property exposure or because there is extensive off-premises liability exposures, but there are important exceptions such as condominium associations.
Types Of Associations Package Policies:
Some associations' property exposure consists only of mobile property. This exposure is best covered using inland marine coverage forms. However, others own buildings or other property and, therefore, should use the property coverage forms. Before deciding on the best coverage forms to use, a complete property inventory should be developed to determine who owns the property, where it is located, the nature of the property, and the types of losses to which the property is exposed.
The building and personal property form is the most widely used property coverage form. Condominium associations and commercial unit-owners can use the building and personal property form, but they are better served by using one of the condominium coverage forms.
An association should carefully consider how it would continue operations following a property loss. Some may have no interruption at all, in which case time element coverages are not necessary. Some may continue by incurring additional costs, in which case extra expense coverage is sufficient. However, if operations will be suspended until the property is restored, business income coverage should be considered. Many associations have long-term leases which means that leasehold coverage should be considered.
Types Of Property Coverages:
If an itemized property inventory reveals items that are mobile in nature, a scheduled property inland marine coverage form should be used in place of the property coverage forms because it provides in-transit and off-premises coverage in addition to the on-premises coverage.
Other coverages should be considered based on the needs of the particular associations. Many inland marine forms include earthquake and flood coverage.
Types Of Inland Marine Coverages:
The commercial crime coverage part includes up to seven coverages. One or more can be selected by entering a limit for it on the declarations. While all the coverages available may be appropriate for a given association, employee theft coverage should always be at the top of the list. If this is the only coverage needed, the employee theft and forgery policy should be considered due to its simplicity and the fact that it provides only employee theft and forgery coverage. An endorsement is available to extend coverage to include volunteer dishonesty.
Types Of Crime Coverages:
At some point, association members will interact with the general public. Liability coverages provide protection for the association for loss or damage to third parties resulting from the interaction with the public done by its members or employees in the name of the association.
Types Of Liability Coverages:
Associations that provide professional services may be accused of bodily injury or property damage due to the rendering or failure to render professional service. These claims are based on malpractice, error or mistake in the performance of professional duties. Separate professional liability coverage should be considered and purchased for these activities.
Types Of Errors And Omissions (E&O) Coverages:
Associations may or may not actually own vehicles. However, they may have non-owned exposures if employees use their own vehicles on association business or a hired exposure if they rent or lease vehicles when out of town on business. An association may have a garagekeepers exposure if valet parking is provided at association events.
Types Of Business Auto Coverages:
Most employers are required by state statute to provide coverage through a workers compensation policy for on-the-job injuries sustained by their employees. An association with paid employees is not exempt from this requirement and must purchase the necessary coverage.
If a subcontractor is used to provide services, that subcontractor should provide a certificate of insurance to verify that the required coverage has been purchased for all of its employees or the association may be held responsible for injuries as a statutory employer.
Types Of Workers Comp Coverages:
Associations must consider their liability exposures when determining the total limits of liability insurance needed. If their operations include direct contact or involvement with children, disabled or other vulnerable parties, higher coverage limits should be considered through the use of an excess or umbrella liability policy.
Types Of Excess Liability Coverages:
Associations may own or lease aircraft as part of their activities or to assist them in performing their operations. Aviation coverage is needed in these cases because coverage for the aircraft exposure is not provided in most liability forms and policies.
Types Of Aviation Coverages:
Associations may own or lease boats or yachts as part of their activities, to assist them in performing their operations or for use by their members. Ocean marine coverage is needed in these cases, because most policies do not cover boat or yacht exposures.
Types Of Ocean Marine Coverages:
Associations may provide services, sponsor events or possess information that can add to their exposures that are not covered by most standard policies. Operations should be evaluated and an inventory made to determine if any of the following policies and coverages should be considered.
Types Of Specialty Coverages:
There are many commercial insurance policies available for Associations. To find out what types of coverage your business needs, speak to a professional insurance broker with experience in insuring Associations.
Learn about the coverages available for specific industires with the Insurance FAQs below: