An Umbrella Policy is an insurance policy that provides additional liability coverage beyond the limits of an HOA’s primary insurance policies, such as general liability or directors and officers (D&O) insurance. It offers extra financial protection in the event of large or catastrophic claims.
Why It Matters for Self-Managed HOAs
For self-managed HOAs, an umbrella policy helps protect the association and volunteer board members from significant financial exposure.
- Provides coverage when primary policy limits are exhausted.
- Protects HOA assets and reserve funds from large claims.
- Reduces personal liability risk for board members acting in good faith.
- Supports long-term financial stability and risk planning.
- Helps the HOA meet lender or governing document requirements.
For boards, especially Presidents and Treasurers, umbrella coverage is a key risk management safeguard.
How to Use It
“The HOA relied on its umbrella policy after a liability claim exceeded the limits of its general liability insurance.”
Best Practice or Tip
- Review umbrella policy limits during annual insurance renewals.
- Store insurance policies and certificates in HOA My Way’s document library.
- Coordinate umbrella coverage with primary insurance policies to avoid gaps.
- Communicate coverage basics to homeowners when appropriate.
- Track insurance renewal dates and coverage details centrally.
