In our last article, we discussed some of the major concerns that are commonly found in HOA insurance policies. While not all risks can be predicted, a certain amount of preparation and awareness can minimize your association’s potential exposures. In addition to securing the best Los Angeles HOA Insurance Package available, heed the following advice to protect your association.
Not only is auditing your insurance portfolio a must, but taking a closer look at your internal controls can also significantly reduce your risk. Of course, having Directors and Officers Insurance is the first step of liability prevention, but what else can you do? The answer: look for irregularities.
Hindman Sanchez explains that when auditors speak of irregularities, they generally mean the unauthorized use of association assets, primarily cash and investments, which cause adverse impacts on the HOA’s financial welfare. Without a proper checks and balances system, these irregularities are more likely to occur. Therefore, it’s imperative you keep an eye out for the following behaviors, which should indicate a red flag within your HOA.
- Sporadic oversight by the board of directors or a lack of involvement in activities.
- Over spending of reserve cash for basic HOA operations.
- A lack of approval of contracts and minimal review on large invoices.
- Cash and investments being managed by one person.
- One person in charge of signing checks, especially for one-time payments in large amounts.
- Excessive billing for phony services rendered.
At Scott Litman Insurance Agency, we strive to protect HOA’s like yours. We specialize in reviewing current insurance policies to determine whether or not vital components and limits are missing, many of which violate CC&R’s requirements. From Employee Dishonesty coverage to Director and Officer liability, we are experts in navigating the insurance policies you need to achieve protection and peace of mind. For more information about our products, we invite you to contact us today at (855) 999-4505, or fill out our online form.