Insuring Association Added Amenities

By:  Becky Hayes, CIRMS, EBP - LaBarre Oksnee Insurance Agency

Among the many considerations for an association, when adding amenities to their community, is the Liability exposure and making sure that the association is properly covered should there be an injury or lawsuit.
Amenities will require both property and liability insurance coverage. Property insurance protects the equipment owned by the association and covers replacement cost of those items due to a covered peril. Liability insurance will cover bodily injury and property damage claims that are brought by a third party due to use of the amenities. A slip and fall on the pickleball and Tennis courts, an injury while using gym equipment or even a dog bite at the dog park may have legal ramifications.
When seeking property insurance for an amenity, you must provide your agent with accurate replacement values of each added piece of equipment. Determining these values can be achieved in a number of ways.  A receipt if the equipment has been recently purchased, an appraisal done on existing equipment or this information can sometimes be found on a reserve study. Many carriers are requesting the Associations Reserve Study In order to ensure they are adequately covering their insured. ​

Liability insurance and the limits purchased are the most important consideration that the Association and its Board of Directors has. Since Idaho does not currently mandate limits of Liability Coverage required by an association, the responsibility falls on the Board of Directors to decide what best fits their Association’s needs. The association is not only responsible for making sure that rules are upheld, but also manages expenses for the community, makes repairs to common areas, and ensures that the property has the right type of insurance coverage in the event of a loss.
A Las Vegas, Nevada Association was ordered to pay a man $20 million after a swing set collapsed on him as a teen and left him with brain damage.  According to the Lawsuit, a 15-year-old sat down on the swing set to send a quick text message. The 42-pound metal crossbar broke, landed on his head and crushed the left side of his skull. A jury found in favor of the 15-year-old and the association was responsible for the injuries.
The $20 million verdict exceeds the Homeowners Associations insurance policy.
For any association with a Club House, gym/fitness equipment, tot lots, sport courts, swimming pools/spas, recreation buildings, equestrian exposures and dog parks, it is highly recommended that you purchase an umbrella policy in addition to the underlying liability provided by your commercial package policy. Umbrella limits can be purchased at limits of $5, $10, $15, $25 and even $50 million limits. Umbrella premiums are very competitive today.  In most cases the difference between $5 million and $15 million or higher limits is only a few hundred dollars.
The Board of Directors can be held liable for adverse decisions and actions such as failing to maintain the property in a responsible manner, or failure to maintain the right types and amounts of insurance coverage.
An association must be smart and proactive rather than reactive when it comes to insurance. At the end of the day, nothing ensures peace of mind more than knowing you and your property are completely and adequately insured.