The school year has just ended and your family recently closed on a home in Flower Mound, TX. Everyone is excited to move in but first there’s painting to be done. Your wife chose a beautiful color known as “Gray Screen” for the exterior. You begin to paint only to be stopped by a letter from your new Homeowner Association (HOA). This leads you to wonder what is the purpose of an HOA. The complete purpose of an HOA is a story for a different article. This article will answer that question as it refers to everyone’s favorite subject, insurance, and the typical areas that coverage is provided.
Board of Directors
Every HOA has a Board of Directors (at least it should). They are filled with a mixture of people that love the neighborhood to those that did it because no one else would. Chances are those Directors aren’t completely aware of what they signed up for. As a Board member (and this is true for any organization) they have opened themselves up to potential lawsuits. This exposure can be mitigated with Directors and Officers (D&O) Insurance for Non-Profits. D&O insurance provides coverage for the Directors and Officers of a group in case they are sued. Why would someone sue a board of directors? Here’s an example: The HOA hires John’s Landscaping to maintain the lawn’s around the neighborhood. The contract is worth about $20,000/year. Halfway through the contract, All Day Lawn Care offers to do the job for $10,000/year. If the Board terminates John’s contract they could possibly be in violation and be sued personally by John.
Does your community have a beautiful Gazebo or a breathtaking pool? Are there townhouses in your neighborhood? How about new street lights that were installed? Or the brick fence that surrounds the exterior of the subdivision? Who takes care of all of those if Texas weather starts to do what Texas weather does? High winds. Golf ball sized hail. Roaring lighting. In Texas, these things can happen about 8 months out of the year. Hopefully your HOA has coverage for all of these things.
Open green space and playgrounds are an attraction for families. They aren’t just inviting for the families in the subdivision but those from all around town too. Who pays for little Jacob’s injury on the swing set that wasn’t maintained properly? What about little Tiffany’s leg that she hurt at the community pool because the deck wasn’t up-kept. Typically, a HOA insurance policy would include coverage for this risk.
An often overlooked area of an HOA policy is the landscaping. Next to the upkeep of the buildings, landscaping is a true sign of pride in home ownership. The drive into a neighborhood can be a huge selling factor (it can also increase the value of the area). Trees, bushes and shrubs can add up pretty quickly. Luckily, those should be included in your HOA’s insurance policy. The cost, generally, isn’t that much.
As always, thanks for reading. If you have more specific questions pelase