Loss Assessment Insurance Coverage

Dear Posters:
A question has been raised about an 'association' (resident group) being sued by a unit owner/resident who happens to endure a fall on the ice, lands in the hospital, requires extensive surgery & therapy, loss of wages, etc. It has been proved that the fall was due to icy conditions which the assn's 'board' did not authorize to have cleaned or maintained. And, to boot, it was trash night!!! The resident files a law suit against the association due to not having the ice/snow removed--resulting in their fall when they put out their trash for pickup.

Now, this is purely hypothetical. What do some of you think about the legality of this situation? If the resident who has been hurt actually wins their case, is the association as a group liable for the award money?

This question came up as we are looking to change our homeowner insurance provider. I would appreciate your input and any personal experiences you have had on paying court costs on a case which your assn. has lost.

Thanks to all for reading my 'fake but could be real--story' and for your thoughts.

You may also want to find out if the homeowner's insurance covers such "accidents". Some HOA's don't have "common property". Each individual is responsible for insuring their own property. If the HOA is responsible for "common property" they should have liability insurance PLUS the homeowner's should have their own policy.
Technically, the person shouldn't be suing at all. They should be directed to the insurance company to make a claim. However, their insurance may pick up the claim and THEN that insurance may sue the HOA's insurance. Much like any car accident.
Just make sure the HOA does have liability insurance. It not only protects the board members from bad decisions resulting in damages but ALL the homeowner's as well.

thanks, Brad. But, I'm confused. Am I to understand that if a resident sues the assn., goes to court, and wins the case, that the liability insurance the Board carries (on themselves? or do they carry liability insurance for all the association as a group?) will cover court costs and award money to the resident who won the case?
So, there is no out of pocket money expected from residents to pay for this settlement?

Sorry, still not getting it. My last question was if the residents were expected to pay for the award/settlement. You answered, no, theres always a deductible. Then who pays the deductible? Isn't this money out of residents pocket (in spec.assessment) if there is none in the general budget for court settlements (which usually there isn't). Sorry, don't get it.

Roger, can you speak to this issue as well?

Paul:

It is also important that you have D & O coverage on your board members which is seperate from liability. This will prevent them from personally getting sued. If you have these policies the only time you need to be worried as a homeowner about having to pay is when an someone in your neighborhood acts with gross negligence. Otherwise if you have a good policy the insurance should cover it.

Roger:

Thanks, that is what I meant to say.

Thanks to all for your input. I apologize that I was not clear in my original posting that it is 'me' as the individual who lives in the community who is asking this question for 'personal' liability insurance coverage.

I'll try to explain myself. Is it possible to carry insurance as a community resident for when/if an association (or is it the Board???) takes a resident to court, loses the case, and the resident taken to court is awarded a settlement. Does the Assn's Liability insurance kick in if the case is lost, and if not, does the award then have to be paid by residents?

I realize the Board has liability insurance on themselves to absolve them from wrongdoing. I have read on this site of problems with cases lost and a large compensation then must be paid by the residents in a spec.assessment/s. This is what I am asking about. Please bear with me in my questions. Thanks.

Hi Paul:

A few things...
1) As a homeowner you would want to cover your own property for fire & other types of damage; you would also want liability in case someone sues you for whatever reason. You may want to get an umbrella policy that kicks in once you have paid your deductible and your other insurance has paid out, to cover excess losses.
2) On your hypothetical case, part of the answer would depend on whether it's a condo (the homeowner typically owns the airspace inside and everything else is a common element, including the private street that goes through the condo property) or a PUD where everybody owns their own home. If it's a condo, the Board has a duty to clear streets and sidewalks. If it's a PUD, it depends somewhat on the documents...the Board may have a maintenance responsibility spelled out in the Declaration for snow removal - or may not. Also, that may be dependent on whether it's a public or a private street and how the maintenance requirement is spelled out.
3) One way to think about insurance: everybody is insured...if you don't have an insurance policy, then you've chosen to self-insure - you cover any losses personally. The same with the HOA: they choose the insurance coverage they want or (in some instances) can get; that includes how high/low a deductible, the level of coverage, etc. A good board will want sufficient coverage to handle any occurrence with no out-of-pocket other than the deductible.

J. Patrick Moore, CMCA