What are the benefits of insurance for our POA?

Our POA is required by state law (WV) to carry insurance (see excerpt of state code below). The problem is, the only fees we collect are road maintenance fees and need to start collecting a "general" fee or something to pay for insurance, financial and legal help. 9 of our lots do not border our road and therefore pay nothing. What are the benefits of this insurance for them? We need to have a response to tell them when they say, "This insurance is for the road and we don't live near the road. Why should we pay for this?" Right now we don't have insurance which really scares me. We only have 33 lots and 27 separate owners.

Thanks in advance for all your help.

http://legis.state.wv.us

§36B-3-113. Insurance.

(a) Commencing not later than the time of the first conveyance of a unit to a person other than a declarant, the association shall maintain, to the extent reasonably available:
(1) Property insurance on the common elements and, in a planned community, also on property that must become common elements, insuring against all risks of direct physical loss commonly insured against or, in the case of a conversion building, against fire and extended coverage perils. The total amount of insurance after application of any deductibles must be not less than eighty percent of the actual cash value of the insured property at the time the insurance is purchased and at each renewal date, exclusive of land, excavations, foundations, and other items normally excluded from property policies; and
(2) Liability insurance, including medical payments insurance, in an amount determined by the executive board but not less than any amount specified in the declaration, covering all occurrences commonly insured against for death, bodily injury, and property damage arising out of or in connection with the use, ownership, or maintenance of the common elements and, in cooperatives, also of all units.
(b) In the case of a building that is part of a cooperative or that contains units having horizontal boundaries described in the declaration, the insurance maintained under subsection (a)(1), to the extent reasonably available, must include the units, but need not include improvements and betterments installed by unit owners.
(c) If the insurance described in subsections (a) and (b) is not reasonably available, the association promptly shall cause notice of that fact to be hand delivered or sent prepaid by United States mail to all unit owners. The declaration may require the association to carry any other insurance, and the association in any event may carry any other insurance it considers appropriate to protect the association or the unit owners.
(d) Insurance policies carried pursuant to subsections (a) and (b) must provide that:
(1) Each unit owner is an insured person under the policy with respect to liability arising out of his interest in the common elements or membership in the association;
(2) The insurer waives its right to subrogation under the policy against any unit owner or member of his household;
(3) No act or omission by any unit owner, unless acting within the scope of his authority on behalf of the association, will void the policy or be a condition to recovery under the policy; and
(4) If, at the time of a loss under the policy, there is other insurance in the name of a unit owner covering the same risk covered by the policy, the association's policy provides primary insurance.
(e) Any loss covered by the property policy under subsections (a)(1) and (b) must be adjusted with the association, but the insurance proceeds for that loss are payable to any insurance trustee designated for that purpose, or otherwise to the association, and not to any holder of a security interest. The insurance trustee or the association shall hold any insurance proceeds in trust for the association, unit owners, and lien holders as their interests may appear. Subject to the provisions of subsection (h), the proceeds must be disbursed first for the repair or restoration of the damaged property, and the association, unit owners, and lien holders are not entitled to receive payment of any portion of the proceeds unless there is a surplus of proceeds after the property has been completely repaired or restored, or the common interest community is terminated.
(f) An insurance policy issued to the association does not prevent a unit owner from obtaining insurance for his own benefit.
(g) An insurer that has issued an insurance policy under this section shall issue certificates or memoranda of insurance to the association and, upon written request, to any unit owner or holder of a security interest. The insurer issuing the policy may not cancel or refuse to renew it until thirty days after notice of the proposed cancellation or nonrenewal has been mailed to the association, each unit owner and each holder of a security interest to whom a certificate or memorandum of insurance has been issued at their respective last known addresses.
(h) Any portion of the common interest community for which insurance is required under this section which is damaged or destroyed must be repaired or replaced promptly by the association unless (i) the common interest community is terminated, in which case section 2-118 applies (ii) repair or replacement would be illegal under any state or local statute or ordinance governing health or safety, or (iii) eighty percent of the unit owners, including every owner of a unit or assigned limited common element that will not be rebuilt, vote not to rebuild. The cost of repair or replacement in excess of insurance proceeds and reserves is a common expense. If the entire common interest community is not repaired or replaced, (i) the insurance proceeds attributable to the damaged common elements must be used to restore the damaged area to a condition compatible with the remainder of the common interest community, and (ii) except to the extent that other persons will be distributees (section 2-105(a)(12(ii)), (A) the insurance proceeds attributable to units limited common elements that are not rebuilt must be distributed to the owners of those units and the owners of the units to which those limited common elements were allocated, or to lien holders, as their interests may appear, and (B) the remainder of the proceeds must be distributed to all the unit owners or lien holders, as their interests may appear, as follows: (1) In a condominium, in proportion to the common element interests of all the units and (2) in a cooperative or planned community, in proportion to the common expense liabilities of all the units. If the unit owners vote not to rebuild any unit, that unit's allocated interests are automatically reallocated upon the vote as if the unit had been condemned under section 1-107(a), and the association promptly shall prepare, execute, and record an amendment to the declaration reflecting the reallocations.
(i) The provisions of this section may be varied or waived in the case of a common interest community all of whose units are restricted to nonresidential use.

Laura - If your POA does not have insurance then your association is not in compliance with state statute, so....comply and get insurance as it's outlined. The benefits of having insurance for the POA are the same as those benefits for having insurance on anything else you personally own. In the event of a loss you will be covered within limits that will hopefully save you money. Consult an insurance expert in your state because your gov. docs. of what the association owns/maintains/repairs need to be reviewed plus Directors and Officers insurance for the BOD members, plus a letter to the homeowners of what the Association insures for, and what the individual HO must insure for on their own.

Laura,

I would go to the courthouse and check the deeds of those 4 lots..if it states they have to pay for road maintenance...then they legally will have to...whether or not they are on a privately maintained road. If it's not in their deeds..they owe no money.

MaryN

Thanks for your response. We aren't trying to charge them road maintenance fees. We are trying to assess for the cost of insurance. Doesn't that make a difference?

Thanks for your response Gerald. The 9 lot owners have full voting ability and are full members of the POA just like everyone else. However, our R&RCs clearly state that they do not pay road maintenance fees if they do not border the road. They are not excluded from *using* the road.

Our quorum is 51% so our goal is 17 members to attend the meeting or send in a proxy. Those 9 lot owners who pay no fee are included in that determination.

The reason the thing is going to a community vote is that Road Maintenance Fees can only be spent on road maintenance. That is clearly stated in our R&RCs. Since RMFs are our only source of income, we have to have a special assessment to get the $ to buy insurance. That is why it needs to go to a community vote.

As to what happens if this gets voted down. I have no idea. I am extremely worried about it. I am extremely nervous as it is knowing we have no insurance. That's kind of why I posted.

We handle all road maintenance, which includes snow plowing, mowing the borders, gravel, and repair. There is no city help.

LauraR2 - 17 owners is just to get quorum. You will probably then need 2/3rd's of 33 or 22 owners to amend the declaration if indeed that is what you are doing. So if the 9 owner are considered part of the voting population they can prevent an amendment to the declaration as a voting block every single time. All depends on what your docs. state.

Be that as it may, don't confuse Road Maintenance Fees with Insurance. You HAVE to have insurance. Road maintenance Fees are to maintain the road, insurance is not the same. It's not considered maintenance it's to insure or protect ALL owners in the event of an accident, or loss for god sakes.

Again, are there any sidewalks and or street lights that border the road you maintain?

This is so frustrating. Our president is really fighting the rest of the board on this issue. She doesn't think we need it. She says the road is not a common element (it is) and she says she was told by an insurance company that they "can't insure the road" and also that we don't have enough homes to need insurance. I have calls in to about 10 different companies to get quotes so we'll see what they say.

Are there other small associations out there who only have roads as common elements? What type of insurance do you have? Thanks!