Sunday, February 28, 2010

General Liability Coverage-How Much is Enough?

All master association policies should have general liability coverage to protect the association from situations where is may have liability to injuries or property damage: a guest sustains an injury falling on a slippery driveway; someone is injured on the playground equipment; someone drowns in the pool; the possibilities are endless.

Most standard policies will come with coverage limits of $1M per occurrence and $2M in aggregate, meaning that the upper limit for a policy period is $2M. Coverage limits go up from here, I've seen them as high as $30M in aggregate. What determines which coverage limit is right for your association? The right answer is "it depends;" there is no formula that works in every situation. To start with every association with <100 units should have $2M per occurrence; $4M in aggregate as a minimum to be afforded personal liability protections for unit owners under the Davis-Stirling Act. Associations with 100 or more unit should have minimum coverage of $3M per occurrence; $5M in aggregate to have Davis-Stirling Act protections. HOWEVER these coverage limits are minimums, there a many situations where your association could need more than the minimum amount of coverage.

Association board members are best advised to seek the counsel of a qualified attorney familiar with HOA issues to determine a general liability coverage amount for a specific situation. He/she will be familiar with the type of legal actions, claims and settlements associations have had to deal with. Generally, some factors that need to be taken into consideration include: total number of units within the association; amenities within the complex - pools, hot tubs, exercise rooms, playgrounds, etc.; percentage of units rented; condition of the premises; whether or not complex is mixed use, commercial businesses and residential living; and, history of claims/losses.

General liability coverage is a key coverage area that board members need to evaluate and determine a best solution for their association.


  1. A coverage for property damage is really important for your business. I highly recommended checking in to it and receive the proper consulting before purchasing. Thank you for the info.

  2. This is great information to know about liability insurance. This is great to know for those with businesses and other public facilities. I have a friend who is trying to get insurance for her business, but doesn't know where to start. I'll suggest that general liability insurance looks like a good idea.

  3. I've always wondered about how much general liability insurance I should have. I've never felt like I have enough insurance. It seems like I may be right. I should check with my insurance agent to see if I have enough to cover what I need for my house.

  4. Excellent post! I just stumbled upon your blog page and gathered some good ideas for what I am working on. General Liability Insurance is something that is never worth skipping over, pinch the pennies somewhere else, just make sure that you are well looked after in every eventuality.

  5. I really appreciate you sharing this info! I've been trying to find some insights on how business insurance works but I have no idea where to start. This gave me some good starting points though..Thank You.

  6. Read your blog and its really informative keep updating with newer post on General Insurance

  7. Really very useful information you had provided here. As by posting like this people will get aware of the insurance sectors as well. So i think this may convert their interest and benefits as well. Thank you and please keep post like this

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