While this coverage may seem like an additional expense for your HOA, California is riddled with faults and subsequently, earthquake activity. While you might prefer to save the extra money in a reserve account for the HOA, one earthquake could knock out the entire savings in one fell swoop. Further, there are certain implications of being a part of the board of directors and acting in the HOA’s best interest, so purchasing Los Angeles Earthquake Insurance coverage is a must.
According to the LA Times, although keeping dues low is a valid concern, artificially suppressing dues at the expense of the safety and stability of the association’s infrastructure is not a “good faith” course of action, let alone sound business judgment. The association as a whole was organized to manage the development and the board can, and should, levy assessments to fulfill that management obligation, according to Civil Code section 1366. In addition, Civil Code section 1365(f)(1) requires the association to prepare and distribute to all of its members a “summary of the association’s property, general liability, earthquake, flood, and fidelity insurance policies” not less than 30 days nor more than 90 days preceding the beginning of the association’s fiscal year.
In order to avoid personal liability, the board members need to inquire about earthquake coverage and make informed and thoughtful decisions about obtaining such policies. If no coverage is obtained, the board must explain to the titleholders of the HOA how they intend to pay for any damages should an earthquake occur and provide their logical plan and rationale for such issues. Moreover, this conversation must be documented and their decision must be passed on to each of the owner’s in the HOA.
Bear in mind, however, that insurance companies typically won’t provide singular coverage for owners who wish to protect the HOA individually. The common interest development, or the HOA, must be adequately protected with the right coverages. If a catastrophic event occurs, these owners will be looking to past and present board directors who made these decisions, and the association, for indemnification and reimbursement for damages, says the article.
At Scott Litman Insurance Agency, we have a unique understanding of the HOA sector and how to properly protect it. Our comprehensive policies are custom written with the HOA, Board, and Manager in mind to protect each facet of your operation. For more information about our products, we invite you to contact us today at (855) 999-4505, or fill out our online form.