Q & A: REGARDING CLUBHOUSE LIABILITY FOR HOAs – Article by Adam Prendiville

Article by Adam Prendiville

What liability does a clubhouse poses to a Homeowners Association. Here are a couple of key Q & A’s to help give you an idea.

Is the Association covered if a unit owner has a party in the clubhouse and someone
gets hurt?

Your current master policy will cover the association for liability arising out of activities in the
clubhouse.

Why do Attorneys & Insurance Carriers recommend the unit owner obtain an
additional insured endorsement if the accident is insured on the Association’s
policy?

Lawsuits for the Association could be filed even without any clear negligence on behalf of the Association. The cost of going through the legal process would be shown on the Association’s policy, which could have an effect on the Association’s insurance premium.

Are there other advantages of getting the additional endorsement from unit
owners?

Besides the benefit of obtaining the additional insured endorsement, there is added value in
requiring a unit owner to cover the Association and prove they have basic coverage. Often,
there is none. Following an injury where the unit owner is uncovered, the plaintiff’s council will be more unwilling to see the Association released from liability, creating a bigger problem. Additionally, it is nice to know that if the unit owner burns down the clubhouse, there is coverage to pay the damage outside of the Association’s policy.

If the Board does not want to enforce this requirement at all times, what are some
good guidelines to use?

Additional Insurance Coverage Required When :
1. Any party attended by non-residents with alcohol
2. Any party involving a piñata or bounce house
3. Weekly Yoga or other exercise class

Additional Insurance Not Required When
1. Bridge Club (no alcohol)
2. T.V. viewing party (no alcohol)
3. Casual gatheringsThe above lists are in no way exhaustive, but rather some ideas on when additional coverage may be needed and the Association listed as additional insured.

What about vendors hired by homeowners that are servicing the clubhouse party?

Vendors such as caterers, bartenders and bounce house rentals should always be required to name the Association as additional insured.

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