Tuesday, April 15, 2014

Insurance as Collateral (Part I)

Unquestionably, a requirement in today’s world - insurance - can be so complex that it often leaves us with many questions.  This is the first of several insurance blogs to address various vital components of your community’s health. 

Our Company often receives questions related to the types of insurance claims communities could face and how often they occur.  Here are some recent real-world court awards involving homeowner associations:

  • $12 million when a boy on a bicycle riding on the sidewalk was struck and killed while crossing a driveway.  The hedges were almost twice the size allowed by code and the stop sign was four feet shorter than DOT regulations.  The Association was liable for 30%, the management company 60% and the vehicle driver 10%.
  • $5 million when another child suffered permanent injuries when his/her bicycle was struck near the community entrance.  There was a hedge and fence that obstructed view.
  • $5 million when an intoxicated man suffered spinal injuries diving head first into the shallow end of a pool.
  • $4 million when two children suffered mercury poisoning caused by a vendor discarding old thermostats in a dumpster.
  • $1.3 million when an intoxicated man was injured when a handrail he was leaning on came off the wall.
  • $1 million when an association failed to run a background check for one of its employees that turned out to have prior sexual predator convictions.
  • $916K when the association failed to enforce covenant violations – allowing a person who was both a board and ACC member to place a mobile home and other structures on the property.
  • $634K when a building exploded from a gas leak caused during digging.
  • $381K when a person who had been injured five years earlier came back after he was of legal age and sued for injuries from falling out a window while a child.
In recent years, jury verdicts against all entities, not just HOAs, have risen by more than 50%.  To see more examples, visit www.iii.org and search for “jury verdicts”, or www.jvra.com and look for “Government Liability”.

Unfortunately, the risk is real for homeowner associations when it comes to legal claims.  Being proactive is the only acceptable choice.

Check back with us in the coming weeks for more insurance-related info!

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