The following are some of the most common coverages for associations. Click on any coverage for more information.
The purpose of this coverage is to protect the association from loss of or damage to association property caused by flood. Your association’s buildings do not have to be in a designated flood zone to experience a loss due to rising water. Flood insurance is never covered by an associations master property policy, it is always a separate policy.
It is important to know that the limit the National Federal Insurance Program (NFIP) will pay in the event of a building loss is $250,000 per unit which includes the association and individual unit owner’s policies. Additional Flood coverage is available in the private insurance marketplace if higher limits are needed. Flood Insurance premiums are determined by the dollar amount of coverage needed, the designated flood zone, and the deductible selected.
The purpose of this coverage is to protect the association from liability imposed by law from bodily injury and property damage occurrences, both on your association property and away from the premises. The insurance company also has the duty to defend the association against any claim which alleges injury or seeks damages regardless of whether the association is negligent.
In Georgia, the Georgia Condominium Act (Insurance Required Section) states that “A liability insurance policy or policies, in amounts specified by the condominium instruments but not in amounts less than $1,000,000.00 for injury, including death, to a single person; $2,000,000 for injury or injuries, including death, arising out of a single occurrence; and $50,000.00 for property damage;”
How much coverage an association should carry is generally decided by the board of directors, with guidance from property managers and insurance professionals.
Liability Limits
Occurrence Limit – This is the maximum amount the policy will pay per occurrence. An occurrence means an accident that results in injury or damage neither expected nor intended from the standpoint of the insured.
General Aggregate Limit – This is the most the insurance company will pay for any and all liability occurrences or losses under the policy during any one policy year.
Extensions of the coverage
Additional Insureds – Provides employees and property managers acting within the scope of their duties the same liability protection afforded to the association.
Advertising Liability – Protects the association against injury arising from advertising activities including slander, defamation of character or libel.
Contractual Liability - Provides coverage if the association has entered into any contracts where it agrees to indemnify or hold harmless the other party.
Cross Liability – Provides protection if an owner or member of the association sues the association for bodily injury damages occurring on a common area as a result of negligence by either a unit owner or the association.
Garage Keepers’ Legal Liability – Provides protection for the automobiles of unit owners or guests that are in the care, custody or control of the association, such as attendants that park cars. Coverage is provided for such perils as collision, vandalism and theft.
Host Liquor Liability – Provides coverage for liability that may arise if the association sponsors events where liquor is consumed or served.
Independent Contractors Liability – Protects the association from loss due to liability arising from operations of sub-contractors. (Many carriers now exclude or limit this coverage.)
Medical Payments – Provides medical expense coverage for people injured on the common property, regardless of whether the association is liable.
Personal Injury – Extends bodily injury to include false arrest, detention or imprisonment, libel, slander, malicious prosecution, defamation of character, invasion of privacy, wrongful eviction and wrongful entry. Some forms may also include coverage for humiliation and discrimination.
Property Damage – Provides coverage for the association for property of others in the association's care, custody or control at the time of loss. Some forms limit coverage to the peril of fire only.
Severability of Interest – Precludes the insurance company from denying liability because of negligent acts of the association or a unit owner.
Association Owns Vehicles
The purpose of this coverage is to protect the association from liability for the operation of motor vehicles. The policy includes liability coverage for protection against third party claims arising from alleged bodily injury or property damage to members of the public. Coverage may also be provided for medical payments, collision, comprehensive perils and hired and non-owned autos.
Hired and Non-Owned Auto (the association does not own any vehicles)
The purpose of this coverage is to protect the association from liability for the use of rented or loaned automobiles used by your association. This coverage can usually be added to the Association’s General Liability policy. Coverage applies if an employee, director, or volunteer using his/her own car or a rented vehicle on an errand for your association is in an accident which results in damage exceeding their personal auto limit.
The purpose of this is to provide coverage for claims alleging losses arising from mismanagement or wrongful acts. A wrongful act means any breach of duty, neglect, error, misstatement, misleading statement, omission or other act done or wrongfully attempted by the association.
Your association’s Directors and Officers coverage should include management decisions made by the past, present or future directors, officers, trustees, employees, committee members, volunteers, or property management company employees of your association.
All Directors and Officers policies are not as comprehensive as others. Here is a list of possible coverage problems to look out for with some Directors and Officers policies;
1) Defense Costs included in the policy limit – They should be in addition to the policy limit (Outside)
2) Does not cover Non-Monetary Damages – Examples include but are not limited to;
A) The Board’s failure to maintain common areas
B) The Board’s failure to adhere to association By-Laws
C) The Board’s failure to properly disburse funds
D) The Board’s failure to give the proper notice of elections
E) The Board’s failure to accurately count votes/proxies
F) The Board’s improper removal of other board members
G) The Board’s improper levying and application of assessments
H) The Board’s improper granting of easements
I) The Board’s or the architecture committee’ improper approval of variances
J) The Board’s decisions that result in physical damage to the association’s property
3) Does not cover acts of the property manager
4) Does not cover acts of Non-Board members (like volunteers, committee members, and employees)
5) Does not cover the failure to maintain or obtain insurance (this requires defense cost coverage)
6) Does not cover discrimination & fair-housing claims
The purpose of this is to provide additional coverage when the limits of insurance on an underlying policy are exceeded. Underlying policies include; General Liability, Directors and Officers Liability, Automobile Liability, and Workers Compensation.
The purpose of this coverage is to indemnify the association for the loss of money, securities or any property because of acts of fraud, dishonesty, forgery, theft, larceny, embezzlement, wrongful abstraction, willful misapplication, misappropriation or any criminal act on the part of directors, officers, committee members, association employees, board members, volunteers, or property manager employees.
In Georgia, the “Georgia Real Estate Law (Fidelity Bond Required Section)” states that any community association management service who collects, maintains, controls, has access to, or disburses community association funds in excess of $60,000 shall be covered at all times under a fidelity bond.
The amount of the bond shall at no time be less than an amount equal to the sum of three months assessments due from all the members of the association or associations managed by the broker plus the amount of reserve funds that the community association or associations require the broker to maintain.
Association Has Employees
The purpose of this is to provide coverage for work related injuries or diseases suffered by association employees that are compensable by statute and/or imposed by law as damages. Coverage is provided for payment of medical expenses and reimbursement of lost wages.
Volunteer (the association has no employees)
The purpose of this is to provide coverage if an association volunteer is injured while working on behalf of the association. This policy will provide coverage for medical and rehabilitation cost for the injured volunteer. It does not usually pay the wage portion because there is no “wage” associated with the work.
This policy is not intended to cover employees of the association or any contractors working on behalf of the association. However, if required by local law to step in as the “employer” as it relates to benefits owed an employee of an uninsured contractor that is injured on the association property this policy will provide typical workers compensation coverage. This policy requires the association to maintain certificates of insurance showing workers compensation coverage for all contractors used.
Most association general liability policies exclude coverage for “Athletic Sports Participant” injuries.
If the association has any sports teams (Swim Team/League, Tennis Team/League, or any other sport Team/League) there are policies available that will cover any and all teams and the association for this type of liability exposure.
Most of these policies include medical expense coverage which is available without having to establish negligence. Often included is coverage for traveling to events and coverage for coaches. Some additional policy options include Directors and Officers and team equipment coverage.
Additionally, there are some other “sports” related liability exposures that the association should be mindful of;
1) Team or League are separate legal entities – Have the Team/League provide the association with a certificate of insurance naming the association as an additional insured, not just a certificate holder. Some swim teams maybe be part of a county league that has its own coverage. This is only acceptable if your association can be added as an additional insured.
2) Instructors using association facilities – The instructor will have to carry their own liability policy and must provide the association with a certificate of insurance naming the association as an additional insured, not just a certificate holder.
3) Your association uses a lifeguard service – The lifeguard service will have to carry their own liability policy and must provide the association with a certificate of insurance naming the association as an additional insured, not just a certificate holder.
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