Volunteers often form the backbone of an HOA with residents expected not only to shape and to administer policy but to pitch in on various community projects. Volunteerism is a positive for organizations that are typically limited by a structured budget, but it also carries with it inherent liability risks. As such, it is important to understand the value of HOA insurance coverage.
Liability Laws Place the Bulls-eye on an HOA
Because the Volunteer Protection Act of 1997 shields unpaid workers from personal liability, non-profit organizations like HOA’s are often the target of lawsuits for negligence or improper behavior on the part of volunteers. Below are three types of HOA insurance coverage that can protect organizations from potentially disastrous results:
- D&O (Directors and Officers) Liability: Most HOA governing boards are comprised of volunteers. D&O liability insurance protects against lawsuits lodged against board members for issues such as discrimination, breach of fiduciary duties or contract, unfair foreclosure or misuse of community funds.
- Worker’s Comp: Accidents can and do happen, and it is not uncommon for a volunteer to be injured. Worker’s comp for HOA’s provides coverage for unpaid employees—something a normal insurance policy does not include.
- Crime & Fidelity Bonds: A dishonest volunteer can wreak havoc on an HOA’s financial stability. Crime & fidelity bonds for HOAs are designed to provide coverage in the event of embezzlement, fraud, forgery or theft.
Effective HOA insurance coverage makes sense for an organization that depends on volunteers. Consider the options available and be certain your HOA is protected.