HOA and Liability: What Insurance Do You Need for Common Real Estate?

A Owners Association (VvE) is responsible for the management and maintenance of common parts of a building, such as stairwells, elevators, facades and roofs. But what if there damage occurs to third parties due to a poorly maintained balcony? Or as one loose roof tile falls on a passer-by?

In such situations, the VvE can be held liable, with possible high damage claims as a result. That is why it is crucial that a homeowners' association has the right one takes out insurance to protect both the building and the financial interests of the members.

In this blog we discuss what liability risks a homeowners' association runs, which insurances are mandatory and what you should pay attention to when choosing the right coverage .

1. Why is Liability a Risk for an HOA?

A homeowners' association is responsible for the maintenance and management of the property common parts of a building. If due to overdue maintenance or a defect in the building damage occurs to third parties, the homeowners' association can be held legally liable.

Common Liability Risks for a Home Owner's Association

✔ Personal injury due to inadequate maintenance – Consider a loose tile in the stairwell that causes a visitor to trip.
✔ Damage to vehicles or property of third parties – For example, a facade panel that comes loose and damages a parked car.
✔ Storm or fire damage to neighboring properties – If a roof tile from the building lands on an adjacent property and causes damage.
✔ Flooding due to leaks – For example, if a burst pipe in a common area causes damage to apartments.
✔ Damage due to work – For example, if maintenance on the roof is carried out incorrectly and water seeps down.

Do you want to cover these risks? Then one liability insurance for HOA's essential.

2. What Insurance Does a Home Owner's Association Need?

A homeowners' association needs multiple insurance policies to limit risks. Some are obliged, while others are highly recommended.

✔ 1. Building insurance (Mandatory)

A building insurance for homeowners' associations covers damage to the common parts of the building, such as:

🏢 Facades and roof constructions
🚪 Stairwells, elevators and communal halls
💡 Electrical installations and pipes

Why is this mandatory?
By law, a homeowners' association is obliged to take out building insurance to cover damage to the building.

📌 Tip: Check whether the insurance also covers damage natural disasters, storm or fire damage covers.

✔ 2. VvE Liability Insurance (Mandatory for Legal Liability)

A liability insurance for homeowners' associations protects the association against claims from third parties in the event of damage caused by the building.

✅ Covers damage to persons or property of third parties
✅ Prevents members from being held personally liable
✅ Mandatory if a homeowners' association employs staff (such as a caretaker)

📌 Example: If a visitor falls over poorly maintained stairs and submits a claim for damages, this insurance prevents the costs from being recovered from the homeowners' association members.

✔ 3. Director's liability insurance (Recommended)

HOA directors make important decisions about maintenance and finances. As a driver makes a mistake, this one can be held personally liable for financial damage.

✅ Protects drivers against claims from members or third parties
✅ Covers damage due to incorrect financial policy or mismanagement
✅ Prevents private liability for board members

📌 Example: If an HOA board mismanages a renovation assignment and this leads to financial damage, members can hold the board liable.

✔ 4. VvE legal expenses insurance (Recommended)

Sometimes legal conflicts arise within the homeowners' association, for example:

⚖️ Conflicts with contractors or maintenance companies
⚖️ Disagreements between members about service costs
⚖️ Disputes with a tenant or property manager

A legal expenses insurance covers the legal costs and prevents the homeowners' association from having to engage expensive lawyers itself.

📌 Example: A homeowners' association has a legal dispute with a contractor about poorly executed roof renovations. Legal expenses insurance helps with the legal procedure.

✔ 5. Glass Insurance (Optional, but Recommended)

In the event of damage to windows in common areas, a Glass insurance provide a solution.

✅ Covers damage to windows and doors in communal areas
✅ Handy for buildings with large glass areas or joint entrances

📌 Tip: Check whether the home insurance already has one glasses cover before you take out this insurance.

3. How much does homeowners' association liability insurance cost?

The premium for liability insurance for a homeowners' association depends on:

📌 The size of the building – The more units, the higher the premium.
📌 The number of residents and visitors – The more intensive the use, the greater the risk.
📌 The insured value – The higher the sum insured, the higher the premium.
📌 Coverage options – Additional coverage for glass, legal assistance or director's liability increases the costs.

💰 Indication of costs:
🔹 Liability insurance VvE – from €100 per year
🔹 Building insurance homeowners' association – from €750 per year
🔹 Directors' liability – from €200 per year

💡 Do you want to know what the best insurance is for your homeowners' association? Request a customized quote Finass Insures .

4. Frequently Asked Questions about HOA Insurance

💬 Is liability insurance mandatory for a homeowners' association?
Yes, if an homeowners' association employs staff or manages common areas, this insurance is mandatory.

💬 What happens if a homeowners' association does not have building insurance?
The individual apartment owners will then be responsible for the costs of damage to the building.

💬 Are apartment tenants automatically insured?
No, tenants must provide one themselves contents and liability insurance for their own property.

💬 Does homeowners' association insurance also cover damage due to overdue maintenance?
Not always. Some insurers refuse payment if it appears that the damage could have been prevented by proper maintenance.

💬 Can a homeowners' association take out collective glass insurance?
Yes, that is possible and often cheaper than individual insurance.

5. How do you take out liability insurance for a homeowners' association?

Do you want to optimally protect your homeowners' association? Follow these steps:

1️⃣ Analyze the risks – Which common areas are covered by the VvE?
2️⃣ Compare insurance policies – Choose an insurance policy with the right coverage.
3️⃣ Request a quote from Finass Insures – Our specialists will help you with a tailor-made policy.
4️⃣ Take out insurance and protect the homeowners' association against financial risks!

💡 Avoid liability claims and financial surprises! Request a no-obligation quote today. 🚀