Broker’s Guide to Planned Unit Developments (PUD) Insurance

Statistics provided by iPropertyManagement reveal that homeowners associations (HOAs) manage 355,000 communities in the U.S., with an average of 22 new associations created each day. More than 50% of all homeowners live in HOA communities. Residential planned unit developments (PUDs), which include single-family homes, are governed by an HOA.

Single-family homeowners in PUD communities are responsible for obtaining Property and Liability insurance to protect their structures and land against property damage and liability exposures. The PUD is responsible for buying Property and Liability to protect against losses that occur in the common areas of the community. Common areas can include entryways, clubhouses, pools, gyms, playgrounds, fencing, signage, gatehouses, etc. Sidewalks and streets are also covered as long as they fall under the control and ownership of the association’s common areas.

The board of directors of the PUD is responsible for purchasing the insurance program for its association. In this article, we will review key coverages a PUD needs and some additional coverages to consider.

What Insurance Should the PUD Board of Directors Purchase?

Property insurance protects against physical damage to buildings and structures that are common to the association. This includes coverage to pay for the costs of repairs or rebuilding if, for example, the association’s clubhouse were to be damaged by a fire or to repair a pool house’s roof destroyed by hail. It’s important to look at how the property’s valuation is covered.

General Liability insurance protects against premises liability such as slips, falls, and pool accidents. The policy will step in to provide defense coverage as well as pay for settlements and judgments for a covered loss in the event of a lawsuit.

Crime insurance protects against losses caused by employee dishonesty, forgery, computer fraud, and certain financial crimes.

Umbrella insurance extends the limits of liability in primary policies (General Liability, Automobile Liability) to protect the association in the event of a catastrophic event.

Directors & Officers (D&O) insurance protects board members from personal financial losses in the event of a lawsuit claiming negligence, breach of fiduciary responsibility, conflicts of interest, lack of oversight, privacy violations, and other exposures. A good D&O policy will cover not only the members of the board but also their spouses, volunteers, and managers.

Our Package Policy for HOAs/PUDs

Distinguished offers a Package policy for PUDs that includes Property and Liability insurance along with specific features that help separate us in the marketplace.

Guaranteed Replacement Cost: Our Property policy is written on a guaranteed replacement cost basis, which means that, even if the PUD’s loss exceeds the policy limit, the insured will be paid the full cost of the loss.

Ordinance or Law Coverage: This is automatically a part of our Property policy form, providing full limits on Coverage A and 25% of the building limit for Coverages B & C up to $1 million each.

Outdoor Property Coverage: Coverage for trees, shrubs, and plants up to $50,000 per occurrence is included.

Crime Coverage: A sublimit for coverage is built into our Package policy.  

Additional Insured by Contract Automatically Included. There’s no need for an association to contact us to add a third party as an additional insured to its Liability policy as long as there is a contractual agreement in place with the third party. For example, let’s say the board holds its monthly meetings offsite at the local library. The board has a contractual agreement with the library to rent the space for a certain period. The library will automatically be included as an additional insured on the policy.

The same applies to a manager or lessor of the premises – we will automatically cover them as an additional insured.

Beyond Property and General Liability

We offer separate Umbrella, D&O, and Crime insurance policies for PUDs & HOAs. We provide limits of $1 million/$2 million under the General Liability portion of our package policy for HOAs/PUDs and can extend coverage up to $10 million with our Express Community Associations Umbrella policy.

Our D&O policy provides first-dollar defense, has a broad insured definition that includes those who perform property management services, includes Employment Practices Liability coverage, and offers a Legal Concierge Hotline to insureds.

Excess Crime insurance is available when higher limits are desired and will sit over our embedded Crime coverage included in our Package.

You Can Write New Associations with Us

Our underwriting expertise and flexibility enable us to write brand new associations. That’s a good thing with the number of HOAs & PUDs formed each year. You can gain a competitive edge with us by having the ability to provide coverage for the association as it’s being built. While a new home in the community is under construction, the developer is responsible for any losses including to common areas. Once the home is completed and added to the association, our PUD Package policy will pick up the common-grounds exposure.

There Are Even More Reasons to Partner with Distinguished

In addition to our robust product offering and expertise in insuring HOAs and PUDs, there are other advantages to partnering with us to insure your clients:

  • Submissions are easy and simple with our online broker portal.
  • We offer quotes within 24-48 hours.
  • You can offer your clients all the coverages they need: Package (GL, Property, Crime), D&O, Umbrella, and Excess Crime.
  • You and your clients will have peace of mind knowing our programs are written with top-tier A+ insurers.
  • Your clients will benefit from responsive, superior claims servicing in the event of a loss.

Contact an insurance expert to begin writing business with Distinguished.

About Distinguished Programs

Distinguished Programs is a leading national insurance Program Manager providing specialized insurance programs to brokers and agents with specific expertise in Fine Art and Collectibles, Environmental and Construction Professional, Executive Lines, Inland Marine, Real Estate & Builder’s Risk, Community Associations, Hotels, and Restaurants. Property and Liability products are distributed through a national network of agents and brokers. Serving the same core markets and partnering with the most stable and reputable carriers, Distinguished’s high-limit Umbrella programs remain the clear choice in its area of specialty for superior coverage, competitive pricing, and attentive service. Through thoughtful innovation, stemming back to 1995, Distinguished Programs fosters growth and opportunities for its brokers, carriers, and employees.

View a full list of our programs and submit business with Distinguished.

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