HOA Board Duties Regarding Insurance
Condominium associations and planned developments are required to carry insurance as set forth in their governing documents.
HOA boards have duties related to insurance that include purchasing policies that protect against several risks. What must be insured and at what levels are determined by the association's governing documents, California law, and prudent business judgment. Following are the types of insurance carried by most associations:
- Directors & Officers Liability
- Commercial General Liability
- Umbrella Liability
- Property Insurance
- Fidelity Bond - Crime Coverage
- Workers' Compensation
- Earthquake
- Flood Insurance
Given that board members are not experts in insurance coverage, they should always consult with an experienced independent insurance broker who specializes in providing insurance to common interest developments.
Agoura Hills Lake Lindero HOA Loses $15.6 million
A Van Nuys Superior Court judge ordered the Lake Lindero HOA in Agoura Hills to pay a $15.6-million judgment to the association's developer and former management company for the wrongful termination of its management agreement.
Court documents stated the board "breached the agreement when they stopped paying management fees under the agreement and prevented the management company from managing the premises.
In addition to the $15.6 million, a penalty of more than $3 million was ordered by the court to pay the management company's attorney fees and other costs.
According to the judge, a majority of members of the board failed to do the right thing. The judge scolded the HOA for having lost its way by carrying on a protracted battle and abrogating its fiduciary responsibility to the members.
Holding the HOA and its legal defense team liable for egregious errors and missteps in its dealings with the former management company, the judge said in court documents that the HOA board and its former president, Chris Barone, "engaged in the worst forms of ethical violations which have resulted in overwhelming and irremediable prejudice to the former management company.
The current HOA president is Hal Siegel, who served on the Barone board. Siegel was also chastised by the court.
American HOA Management
English: 818-991-9019
Chinese: 818-661-9255