Insurance: A Must-Have or Couldn’t Hurt? Making Smart Yet Affordable Coverage Decisions

From equipment failure and personal injuries to tornadoes and tropical storms, disasters happen, and any condominium association worth its salt knows that it needs to be prepared for a rainy day. And a great chunk of said preparation consists of insurance.

But with a vast array of coverage plans available at an equally expansive array of costs, how can a board decide what its community absolutely needs? What could be useful, but isn’t a must-have? What is entirely superfluous? Florida is famous for hurricanes, but earthquakes seem unlikely. California has the opposite problem. Chicago may be widely known as "The Windy City," but that wind is more blustery than destructive. Some decisions are no-brainers, while others can keep a responsible board member up all night. Fortunately, there are experts and thorough resources about that can help alleviate a board’s insurance-based woes.

Bare Bones

There are certain basic coverage options that are actually not options at all; for a board to not have them in place would be irresponsible, even negligent, and in some cases, illegal. "The Illinois Condominium Property Act and the Common Interest Community Association Act require that community associations have property coverage, general liability coverage, directors & officers liability coverage and fidelity coverage," says Kelly Rumachik, an account executive with CISA Insurance in Elgin. Rumachik notes that fidelity coverage is technically not mandatory for all community associations. "For condominiums, it is required if you have six or more units, and for HOAs, it is required if you have 30 or more units. But, our agency strongly feels that no matter the size of a community association, this is coverage that you want to have, as it protects the association's money from theft."

Adam Collins, CIC, CIRMS of Ian H. Graham Insurance, a national firm with offices in the Chicago area, says directors & officers insurance prevents board members from being held personally liable regarding certain decisions, as it covers them in cases of unsubstantiated claims of wrongdoing by owners for its day-to-day decisions; anything from what landscaper to hire to which ailing part of the property to fix first.

General liability insurance, on the other hand, is often referred to as "slip-and-fall" by those in the know, as it covers an association in the case that anyone gets injured while on the premises. This type of insurance can also be a godsend should anyone attempt a fraudulent injury suit, saving a board from all sorts of legal and financial headaches.

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