HOA Insurance Coverage: What Title Companies Should Watch For to Protect Buyers

In Colorado real estate transactions, HOA insurance coverage is often overlooked—but it can have serious implications for buyers and title companies alike. From inadequate liability coverage to missing fidelity bonds, gaps in HOA insurance can expose homeowners to financial risk and complicate closings. Title companies using COCRS can play a key role in identifying these issues early.

Why HOA Insurance Matters
HOAs typically carry several types of insurance, including:

• General liability (for common areas)
• Property insurance (for shared structures)
• Directors & Officers (D&O) liability
• Fidelity bonds (to protect against theft or fraud)

If coverage is missing or insufficient, buyers may face unexpected costs or legal exposure after closing.

Red Flags to Watch For
Title companies should review HOA insurance documents for:

• Lapsed policies or expired certificates
• Coverage exclusions that leave common areas unprotected
• Low coverage limits that don’t match the property’s value
• Missing fidelity coverage, especially in self-managed HOAs

COCRS can help retrieve and organize these documents for easy review.

Best Practices for Title Companies

• Request the HOA’s insurance certificate and policy summary early in the process.
• Verify coverage dates and limits against the property type and HOA structure.
• Include insurance status in the title commitment if concerns arise.
• Educate buyers and agents about potential risks and recommend further review if needed.

How COCRS Supports This Process
COCRS simplifies insurance verification by:

• Providing access to HOA documents
• Offering contact reports to reach HOA managers

Conclusion
HOA insurance isn’t just a formality—it’s a safeguard for buyers and a risk factor for title companies. By proactively reviewing coverage and using COCRS services, title professionals can protect clients and ensure smoother closings.