Both the North Carolina and South Carolina Planned Community Acts require homeowners associations to carry property and liability insurance from the time the first lot is sold. The property insurance, generally included in a comprehensive policy, should cover the common elements against all risks of direct physical loss, including fire and extended coverage perils like hail damage and explosion. At the time the insurance is purchased, the total amount after deductibles should not be less than 80% of the replacement cost of the insured property. This will cover common buildings and other commonly owned property. Liability insurance protects the association from damages due to bodily injury or property damage for which the association is legally liable. Not all causes are covered in standard liability insurance, such as injuries from motor vehicles, smoke or fumes, malicious prosecution, and injury to employees due to employment. Additional riders and policies can cover most of these exceptions. Most associations should have liability insurance of at least $1 million and an additional umbrella policy can raise a limit a basic policy cannot meet. The third type of insurance most HOAs carry is directors and officers insurance. This type of liability insurance protects the officers and directors of an association from personal liability suits brought by owners in the community or third parties. The policy can be included in a blanket commercial policy or on its own. With both types of liability insurance, it is important to note if the policy is for occurrence coverage or claims made coverage. An occurrence policy will cover an instance that happened during the period the policy was in effect, even if it happened after its expiration. Claims made policies cover events that happened during the period the policy was in effect and the claim is made before the expiration date. Some claims made policies also cover claims made during its effectiveness, even if the event happened prior to the date it went into effect. There are a variety of other insurances an association may wish to carry, such as flood insurance, workmen’s compensation, fidelity, and automobile insurance, depending on the needs of the association. Condominium associations are required to carry a master insurance policy as per the North and South Carolina Condominium Acts . This policy includes both liability and property coverage for the entire development, including the units. Meaning, in the case of catastrophic destruction, the building will be replaced as originally built. Unit owners should carry their own policies to cover their improvements and belongings as well as anything additional the master policy does not cover. Solid insurance policies will protect both the association and homeowners in events of disaster or liability claims. Always make sure policies meet regulations by consulting an insurance agent.