How to Avoid the Top 5 Insurance Mistakes HOA Boards Make

For many homeowner associations, insurance is one of the largest and most misunderstood budget items—yet it’s also one of the most important. The right coverage protects not only physical property, but also your association’s financial stability and board members’ peace of mind.

Unfortunately, many HOAs only review insurance policies at renewal time, when premiums have already increased or coverage decisions are being rushed. Without a clear understanding of what is covered (and what’s not), boards can face costly surprises in the event disaster strikes.

At Clear View HOA Financial, we help boards understand how insurance fits into the bigger picture of community financial health. A proactive review will ensure that your policies align with real risks, comply with governing documents, and support long-term financial planning.

Here are the top five insurance mistakes that HOA boards commonly make—and how to avoid them:

#1: Renewing Policies Without a Full Review

Many boards simply renew last year’s policy without taking the time to compare coverage or assess changes in risk. While it may seem efficient, this habit can result in outdated limits, unnecessary expenses, or missed opportunities for better protection.

The solution is to start the renewal process early—ideally three to four months in advance. This will allow your board adequate time to review coverage, ask questions, and make informed decisions. Regular reviews also help ensure that property values, liability limits, and deductibles remain appropriate as conditions change.

#2: Underinsuring Property and Common Areas

Rising construction and material costs have left many communities underinsured. If your policy hasn’t been updated in several years, your coverage limits may not be sufficient to fully rebuild after a major loss.

Working with your insurance advisor to confirm current replacement cost values is essential. Boards should also incorporate insurance evaluations into their annual budget and reserve planning process in order to keep coverage in line with real-world costs.

#3: Overlooking Directors & Officers (D&O) Coverage

Serving on an HOA board comes with several important responsibilities—and sometimes, difficult decisions. Even when boards act in good faith, disputes can arise. Without strong D&O coverage, board members’ personal assets could be exposed in the event of a lawsuit.

A robust D&O policy should include defense coverage and extend to all current and former board members, volunteers, and committee members. Ensuring that protection is in place will help your board lead with confidence.

#4: Ignoring Specialty Coverages

Standard insurance policies often miss emerging risks. Cyber threats, fraud, and building code changes can all lead to uncovered losses if your association is not protected by specialty endorsements. Consider whether your community may need added protection for:

  • Fidelity and Crime– safeguarding against theft or embezzlement.
  • Cyber Liability– protecting sensitive homeowner or financial data.
  • Ordinance and Law– covering code-required upgrades after damage.

These additions can make the difference between a smooth recovery and a financial setback.

#5: Failing to Align HOA and Homeowner Policies

Coverage confusion between the HOA’s master policy and individual homeowner policies is common. Without clear communication, owners may assume that something is covered when it is not—which can create frustration and potential financial loss after an incident.

It’s crucial for boards to work with insurance professionals to clarify who is responsible for what. Sharing this information with homeowners through newsletters or annual meetings can help prevent misunderstandings and strengthen trust within the community.

Why the Right Insurance Matters

As a cornerstone of your community’s financial health, proper insurance coverage protects assets, shields board members from personal liability, and supports accurate budgeting and reserve planning. It also helps to build confidence among homeowners by reinforcing that the board is managing community resources responsibly.

When insurance and financial oversight work hand-in-hand, your HOA can plan confidently for the future—knowing your community is protected from both expected and unexpected risks.

Partner with Experts Who Understand HOA Finance

Clear View HOA Financial helps community associations strengthen their financial foundation through expert services such as accounting, budgeting, reserve tracking, and annual insurance reviews that ensure your coverage aligns with current risks and requirements. Our role is not to sell insurance—it’s to provide the financial oversight and guidance your board needs to make informed, confident decisions.

Fill out our contact form today to schedule your next insurance review and keep your community protected, compliant, and financially secure.

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