HOA liability insurance

Started by RichardK5 • 11 replies • 2430 views

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RichardK5 (Ohio)
Posts: 2

Posted:

Can anyone tell me where to find information regarding the number of lawsuits instituted against HOA'S concerning liability claims? What I am looking for is in any given year the total suits instituted against HOA's; the one's settled by insurance, how much they were settled for, and awards given that were above the liability limits of the HOA's policy.

DonnaS (Tennessee)
Posts: 5,671

Posted:

Richard,
It seems to me that you asked this earlier this year. There is no one that I know who has compiled this type of data. Sorry.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Let me suggest you try the Insurance Information Institute:

http://www.iii.org/individuals/askiii/

I doubt if you will find what you are looking for specifically, since it is likely competitive confidential information. Many lawsuits settled out of court without revealing details. Insurance companies guard such information.

SusanW1 (Michigan)
Posts: 5,202

Posted:

What kind of liability claims?

Against the Board or the Association?

One thing about being a not for profit: There's really no assets of value that anyone would want.

P.S. I believe that Restricted funds like Reserve Funds could not be attached to any lawsuit.

SusannaM (Florida)
Posts: 366

Posted:

I have a scenario where one board member has been adamant about having a fence around our park installed. At every board meeting he's used scary tactics to impress the few homeowners attending such as that if there were ever an accident the HOA can face a lawsuit by the HO. By the way he sells liability insurance. We have a retention pond at the park. I happen to own the lot adjacent to this park and does he. We have proper signs along the pond and at the park. The nteresting thing is that the park has been in existence for at least 4 years (long before I purchased here) and only now this board member is pushing his agenda. He's told me that the reason behind his pursuit is that if he were to call the cops to arrest someone inside the park the cops won't do anything 'cause there is no trespass. I've never heard such a thing before, and I think he's allucinating.

Your thoughts.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By SusannaM on 10/31/2008 2:34 PM
I have a scenario where one board member has been adamant about having a fence around our park installed. At every board meeting he's used scary tactics to impress the few homeowners attending such as that if there were ever an accident the HOA can face a lawsuit by the HO. By the way he sells liability insurance. We have a retention pond at the park. I happen to own the lot adjacent to this park and does he. We have proper signs along the pond and at the park. The nteresting thing is that the park has been in existence for at least 4 years (long before I purchased here) and only now this board member is pushing his agenda. He's told me that the reason behind his pursuit is that if he were to call the cops to arrest someone inside the park the cops won't do anything 'cause there is no trespass. I've never heard such a thing before, and I think he's allucinating.

Your thoughts.

You have hit upon a very typical situation. Lawyers, insurance sellers, accountants, etc see the world (rightly so) as full of potential problems that have to be solved. That is why, like any other resource, professional advice, needs to be "managed." Lawyers are among the worst board members for that very reason.

I have always advocated that before professional advice is heeded, first decide what is the desirable thing to do. Then, the question becomes, not "Can we do this?, but, How can we do it?"

In this particular instance, the insurance agent/board member is not a disinterested party.

I would suggest that his notion of trespass is off base. Were the alleged trespasser a resident accessing the area legitimately and within his/her rights under the covenants and rules, it is not trespass. But were the alleged trespasser not entitled to be there, an arrest could be made.

First, make sure that the association has adequate liability insurance that the association board has carefully researched and considered as part of their ongoing due diligence obligation.

Instead of advocating a fence, this particular board member ought to be pushing for an independent assessment of the association's risk, either through your existing insurance carrier, or through an independent risk assessment consultant.

An independent risk assessment might recommend a fence, and then again, it might not.

GeorgerwilliamsW (Indiana)
Posts: 975

Posted:

Quote:

Posted By SusanW1 on 10/31/2008 12:45 PM
What kind of liability claims?

Against the Board or the Association?

One thing about being a not for profit: There's really no assets of value that anyone would want.

P.S. I believe that Restricted funds like Reserve Funds could not be attached to any lawsuit.

Excuse me, Susan, but where do you get this notion that a not for profit has "really no assets of value that anyone would want." That is simply wrong. Many not for profit organizations have substantial endowment, own buildings, land, intellectual property, etc. that have significant value. If that were not the case, then it would not be necessary for a not for profit to carry liability insurance, since there is nothing to protect.

And, no Susan, the reserve fund is not off limits. I know of no state or federal law anywhere that would support your belief that "Reserve Funds could not be attached to any lawsuit."

RobertZ1 (Michigan)
Posts: 66

Posted:

Is the issue that your HOA does not have proper sized signage that states "private property, no trespassing"?

Our HOA was told many years ago, before my time here, that the posting gives notice that any person on the property has been noticed that it is PRIVATE. The police are then able to enforce private property rights and remove any trespasser, and you can take action against someone for violating your HOA's rights.

With the problems for many property owners, including HOA's of liability from lawsuits this would seem more than appropriate to simply give notice to outsiders to "stay off" if you don't belong!

Last thing you want to hear is a story of after the facts are in, you did "not" use due dilligence to protect your HOA property and your members.

SusanW1 (Michigan)
Posts: 5,202

Posted:

(I wish Susanna would have started another thread!)

What do HOA really "own" but, really, liabilities dressed up as assets!

So who would want any of the "assets" belonging to an HOA? You really could not do anything "profitable" with it.

Our HOA ends the year with less than $1,000 in the general fund. That's how it's supposed to be. Our bylaws state that there is a RF and its purpose. There is a large amount of $ in the Reserve Fund - BUT, it is planned out-funding to take care of the assets (liablities). I still believe those funds would be untouchable, if there should be a settlement against the Association, Inc.

I would be interested in seeing how HOA have handled huge lawsuits settlements, too. My guess is that there would be few or no assets to attach, but there might be a possible special assessment levied against each Member. Individual homeowner insurance might kick in then.

SusannaM (Florida)
Posts: 366

Posted:

SusanW, I did not start another thread 'cause my point has everything to do with the OP topic.
George, thanks for your input.
This board member claims his "expert" opinion is as good as any attorney's. That in itself is dangerous. This board member also claims that he's found evidence of lawsuits against other HOAs in our county records, which is what the OP was asking. Our insurance agent has said that perhaps all we'd need is a barrier between the playgroung and the pond, which are a few yards apart. So the urgency to fence the entire park is questionable at best. Furthermore, it is customary that any material alterations to common property be submitted to the membership. The proposed fence will cost somewhere around $20,000.

JohnK3 (Pennsylvania)
Posts: 967

Posted:

Here's the bottom line. Signs will not stop and fences will not stop trespassers if they are set on entering restricted common areas, pools, buildings, etc. Signs on your property saying it's monitored by ABC Security will not stop burglars if they are set on burgling.

Signs might dissuade some, but not all. Signs might help establishing due dilligence, and might give the Federales more leeway in dealing with real or perceived criminals, but that's after the fact.

A good insurance policy is the best protection from unfavorable aftermaths, also after the fact.

KirkW1 (Texas)
Posts: 1,665

Posted:

I think there are two issues at play and national information will resolve the questions of neither.

First, while the definition of trespass is the same, what is needed to enforce it does in fact vary from state to state. So to find out what is needed to enforce a trespass situation will vary. And then you have what the police will bother to enforce which opens a whole new can of worms. The best advice I can think of is to check you state laws and call the police authority.

Second is the liability issues. And the view of people with regards to this varies as well. What constitutes an "attractive nuisance" will vary quite a bit. Your insurance company will try vigorously to keep the whole thing out of court. The thing is that when you get to court you are relying on 12 people to decide. And the way 12 people will go is unpredictable at best. But still, there will be trends. For instance juries in rural areas will often take a much dimmer view of trespass then those in more urban areas. But again, this is only a trend.

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