Associations Insurance FAQ

• At the minimum, associations need general liability insurance.
• If they have employees they will need workers compensation in most states.
• If they have vehicles registered to the business, or use vehicles for the business purposes, they will also need commercial auto.
• There are also other specialty coverages and endorsements that might be needed based on their operations.

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:

• Businessowners Policy (BOP)
• Commercial Package Policy (CPP)

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:

• Building
• Business Personal Property
• Personal Property of Others
• Improvements and Betterments

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:

• Accounts Receivable Coverage
• Bailee Customers Coverage
• Commercial Articles Floaters
• Contractors Equipment Coverage
• Difference in Conditions (DIC) Coverage
• Electronic Data Processing Equipment Coverage
• Fine Arts Coverage
• Scheduled Property Coverage
• Signs Coverage
• Transportation Coverage
• Valuable Papers and Records Coverage

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:

• Computer and Funds Transfer Fraud Coverage
• Employee Theft Coverage
• Forgery or Alteration Coverage
• Inside The Premises-Robbery or Safe Burglary of Other Property Coverage
• Inside The Premises-Theft of Money and Securities Coverage
• Money Orders and Counterfeit Money Coverage
• Outside The Premises Coverage

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:

• Commercial General Liability (CGL) Coverage
• Special Events Liability Coverage

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:

• Miscellaneous Medical Professional Liability Insurance Coverage
• Physicians, Surgeons and Dentists Professional Liability Coverage

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:

• Auto Medical Payments
• Business Auto Coverage
• Collision Coverage
• Comprehensive Coverage
• Garagekeepers Coverage
• Hired & Non-owned Auto Coverage (HNOA)
• Uninsured/Underinsured Motorists Coverage

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:

• Stop-Gap or Employers Liability Coverage
• Workers Compensation and Employers Liability Coverage

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:

• Excess Liability Coverage
• Umbrella Coverage

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:

• Business Legal Expense Coverage
• Cyber Liability Coverage
• Directors and Officers Liability Coverage
• Electronic Data Liability
• Environmental Impairment Liability Coverage
• Fiduciary Liability (Pension, Welfare and Employee Benefit Funds) Coverage
• Identity Theft Insurance Coverage
• International Insurance Coverage
• Lead Paint Contamination Coverage
• Media/Communication Liability Coverage
• Recreational Trail Liability Coverage
• Solar Energy System Coverage
• Underground Storage Tank (UST) Liability Coverage
• Unmanned Aerial Vehicles (UAV) (Drones)
• Weather Coverage