All of the claims in this report are completely true.  I am leaving out the names of the associations involved in order to protect their privacy.  This document is being provided for your education and entertainment.

1. There is a 52 unit HOA.  The HOA’s sole responsibility is the maintenance of the roads within the association.  Each homeowner is responsible for the maintenance of the road in front of their home, so the association acts as a sinking fund for owners within the association.  The dues for the association are $54.00 per month of which $40.00 dollars is deposited in the associations reserve account to maintain the road.

   The association wanted to rewrite their CC&R’s, however the current CC&R’s stated they needed a unanimous vote of the owners to change it.  Despite this, the association decided to adopt the new CC&R’s with less than a unanimous vote. One of the dissenting owners sued the association to be released from the contract.  The association’s insurer spent $500,000 and the homeowner spent a similar amount throughout the litigation process.  The homeowner won the suite and was released from the association.  It will take the homeowner 2,976 years to recover its court costs.  The association is now faced with a D&O bill that is in excess of $14,000 per year.  The moral of the story is that some people do sue just based on principle regardless of what it costs them.

2. There is an association in West Hollywood, California that has a rooftop community room that overlooks the route of the city’s annual gay pride parade. The community room and the elevator that take members up to it are closed off from the rest of the roof by a large 6 ½ foot fence, beyond which is a 4 foot parapet fence around the edge of the roof.  The association’s President decided to have a party in the association’s community room while they watched the parade.  During this particular party a female attendee decided that the lines for the bathroom were too long and that the President’s unit downstairs was too far away. This attendee decided to climb the 6 ½ foot fence closing off the community room and the 4 foot parapet fence around the edge of the roof. The lady (term used loosely) dropped her pants and squatted over the edge of the roof. She slipped and fell four stories, killing herself on the first floor balcony. Her heirs sued the association claiming wrongful death because the association served the alcohol that impaired her judgment. Since the association did have liquor liability coverage, which most associations do not, its insurer provided the defense.

   If you have common areas (pool, community room, communal barbeque area) and allow owners to have parties that serve alcohol in them, your association is vulnerable and needs to defend itself in any lawsuit that arises from the damages done by intoxicated people that leave the party.

3. An ocean-side association had a deck area outside its building where people typically sunbathed.  While sunbathing, one of the owners slipped on bird droppings and claimed injury.  The owner sued the association for failure to maintain the common areas.  The case was subsequently thrown out on summary judgment.  The point is that no matter how careful you are with maintaining your common areas, if an owner has an ax to grind with the board, he or she will find ways to create litigation.  Make sure that you have appropriate limits and are in compliance with the Davis Sterling Act guidelines in order to properly protect the owners of your association.  If you are not sure of the guidelines or suspect that you may have inadequate coverage, call us.  We will be happy to review your current policy and make sure that you are properly covered.
4. An association in South Florida, whose ownership is made up of retired elderly Jewish and Cuban families, had a problem with Cuban families that were non-owners sneaking in and using the pool.  The strictly Jewish board passed a rule which stated that all Cuban owners needed to wear an orange armband when using the pool.  The Cuban owners sued the board claiming that they were being discriminated against.  Luckily the association had proper coverage and the association’s insurance company paid out the $16,000,000 limit on the umbrella and D&O policy.  However, many common D&O policies exclude discrimination coverage.  The lesson you need to learn is that not all D &O coverage is the same. Contracts are different.  You need to know what is covered to know the true value of the contract.
5. The heirs to an elderly wheelchair-bound owner’s assets contended that the owner’s wheelchair hit a crack outside of his townhouse causing the owner to fall out of his chair, hit his head and die.  The heirs sued the association for $2,000,000 alleging wrongful death due to the negligence of the association for failure to properly maintain the common areas.  However, after further investigation, it was shown that the cause of death was in fact cardiac arrest and not a fatal blow to the head.  It appears that the man had died previous to his heirs taking him out of his unit and pushing him out of his wheelchair in front of the crack.  The insurance company ended up paying close to $30,000 to prove the suit was baseless.
6. An owner of a condo decided to have sex with her boyfriend in the common area of her association.  After they were done, her boyfriend dropped the used condom on the floor.  The girlfriend slipped on the used condom, fell, and sued the association for failure to maintain the common areas.  The insurance company had to pay $22,000 to settle the case.
7. The lesson one must take from this claim and the previous one is that we do not get to pick our neighbors.  Every time a unit is sold, it is a form of Russian Roulette.  If you get one of these gems as your new neighbor, it ceases being if, but rather how many times will they sue.  Do you have proper limits and coverage to protect all the other owners in the association from your new neighbors?

   An association erroneously began foreclosure proceedings on a unit owner that was in arrears on her dues with the association.  The error was caused by the property manager’s failure to remove this owner from his delinquency list.  The “delinquent” owner turned around and sued the association for defamation of character, stating the foreclosure proceedings ruined her credit rating.  This claim ended up costing the insurance company $168,000 between the defense and settlement.

If your association’s D&O policy does not provide for coverage of your property manager then you are potentially exposed to a similar situation yourself.

These are just of few of the odd claims that I have heard over the years, but there are hundreds of others.  This is why insurance is meant for both those events that you are aware of, as well as the many types of losses that you would think could never happen.

What you should learn from this that all insurance contracts are different and that the coverage you are receiving is just as important as the price you are paying. Many times if you are shopping insurance and a board focuses on price, less obvious coverages are dropped in order to make the policy more price competitive.  You need a trusted professional that specializes in association insurance to be able to assist you in evaluating what is the correct coverage for your association and what coverage you really do need.  This is why you need an expert like the Elliot Katzovitz Insurance Agency to carefully review your CC&R’s and the risk profile of your association to provide you with the appropriate coverage for your association’s needs.  All you need to do is call us at 888-664-3276 or click on the button below and we will be happy to assist you.