What insurance limits should we require from a management company?
General liability, commonly $1M per occurrence and $2M aggregate. Professional liability, sometimes called errors and omissions, at $1M or more — this is the policy that responds when the management company gets something wrong, and it is the one most often absent from the conversation. A fidelity bond or crime policy covering employee theft of association funds, at a limit at least equal to the maximum funds handled including reserves. And workers compensation, which is required in almost every state once there are employees.
Cyber liability is increasingly relevant and not yet standard. A firm holding your owner roster, bank details and payment data has a breach exposure, and carrying cover for it is worth noting. Not carrying it is not currently a mark against anyone.
Ask for a certificate of insurance rather than an assurance, check the policy period is current, and ask to be named as an additional insured where the policy allows. Then diarize the renewal date. A certificate confirms cover on the day it was issued and says nothing about the day you need it.
General information for Board members, not legal advice. State law and your governing documents control, and both vary.
More on money, records and compliance
- What should be in our monthly financial package?
- Can Board members see paid invoices in the portal?
- What is a reserve study and how often do we need one?
- Does the management company arrange our reserve study?
- Do we need an annual audit, and does management handle it?
- What is a fidelity bond and how much coverage do we need?
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