Legal reasons to separate Social Committee

In the past postings, the reasons for running Social Committee as a separate entity were, mostly, about opening new avenues of funding, e.g., selling tickets, fundraising, sponsorship... I am wondering where one can read the cases analyzing the liability aspect of it. Social activities would probably involve more risks not covered by contractors’ policies. Are there court cases or another publicly available information where HOAs’ were subject to judgements/settlements that would be directed to the Social Committee as an independent entity otherwise?

You don’t get to be an independent group of people and stand under the HOA’s insurance umbrella. If your social committee is a separate entity, none of the committee members are insured by any insurance maintained by the HOA and, in the event of a lawsuit, the HOA board should refuse to make an insurance claim on the committee members’ behalf.

If your committee is chartered and overseen by the board, the committee members likely are insured by the HOA D&O policy as volunteers, but engaging in commercial activities may not be covered under HOA insurance putting the HOA and the committee at risk.

I realize to many owners, an HOA’s mission is socializing and entertainment, but it really isn’t their function.

ElenN: “… insurers settle these cases like 99.9% of the time…”
DeanJ: “You don’t get to be an independent group of people and stand under the HOA’s insurance umbrella…”

For discussing this aspect with the membership and making analogy with their personal auto, home or umbrella insurance policy, would the following be an adequate representation of a risk? “If our insurer would have to settle with the claimant for a significant sum, the policy renewal may become very expensive (provided, we would be able to buy such a policy at all).”

I believe you should telephone an insurance broker in your area and present what you desire to do and let them advise you. But, I believe for insurance they are going to require the Friends of the HOA committee be incorporated as a non profit.

The out for the HOA is your committee including the HOA as a named insured on the committees insurance. Then you could do what ever the committees insurance covered to include commercial activities.

The title of this thread is reasons to separate Social Committee. In my view, you can’t separate the social committee because it no longer is part of the HOA and the purpose of the independent social committee is to bypass the decisions of HOA board. Why anyone believes that would be successful is a bit amazing.