A good homeowners’ association is one that is busy making the community enjoyable and safe. You need look no further than the bylaws to know that the responsibilities of the HOA are numerous. With every responsibility, however, comes risk. When the HOA is accused of not doing what it is supposed to do, it needs errors and omissions insurance to cover the costs that result from said accusations.
Because the HOA’s list of duties is broad, the scope of the insurance coverage needs to be broad as well. E&O insurance needs to be able to be able to protect against a variety of common exposures. Both mistakes and instances of negligence can cause legal problems for the HOA. If, for example, a member makes a financial error that results in a loss of community funds, errors and omissions insurance should be able to cover legal costs as well as help recoup the financial loss that resulted from the mistake. Even something as simple as improper documentation can cause problems for your community’s board.
A broad E&O policy is an integral part of the comprehensive insurance coverage every homeowners’ association needs. It not only covers allegations of misrepresentation or errors but also protects your HOA when it is accused of negligence.