A reader writes: My Association requires that if we are going to reserve the clubhouse we need to provide a $1 million dollar HOA insurance liability policy with the association as a named insured! If we are going to have alcohol, it is another $1 million dollars! This is really unfair. We own the clubhouse and we pay for HOA insurance for the association in our assessments. How can they get away with this? I can’t afford to do this.
Requiring additional insurance for special use of the clubhouse (and sometimes other amenities) is actually pretty normal. While your association most likely does have an HOA insurance liability policy (if not you should be really concerned), asking the rest of the membership to pick up the increased liability for entertaining your guests is a situation most associations will avoid. Rather, it is best if your insurer picks up the first line of defense. In some cases, associations have contracts with the owner required before rental to make that even clearer, and in many cases, there is an additional level of insurance required if the homeowner will be serving alcohol.
Assuming you already have liability insurance, then adding the association as an additional insured for a single event is usually free or very, very low cost ($25-$50). If you are paying more than that, you might want to shop for another carrier. If you have decided to run your life “self-insured” and do not carry any liability insurance, a single-event policy may be the solution but would cost significantly more. If you live in a condominium, your HO6 policy that covers your contents also has a liability clause that is typically sufficient if you add the association as an insured for the event.
All that said, associations that do not require additional HOA insurance from homeowners using amenities for special events should consider discussing doing so with their legal advisor and insurance agent.
Articles are for advertising and general information by The Helsing Group, Inc. They are not intended to provide legal advice, but rather reflect our opinions as Community Association managers and Consultants. Readers should not act on issues raised in our newsletters or websites without consulting legal counsel.
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