During this tough economy, associations are looking for ways to trim expenses; but opting out of insurance coverage is not a prudent choice. In my opinion, even the smallest homeowners’ association needs insurance coverage. If an HOA owns any property, then there is a risk that a resident, visitor or guest could be injured or hurt on that property. Insurance claims are rare, but it is too risky to consider going without coverage.
Eliminating coverage may save the association money in the short term, but the cost savings is not worth the risk of exposing the community to tremendous liability. In addition to maintaining coverage, HOAs should also take preventive actions to limit their risk exposure. These precautions include the obvious steps like maintaining equipment and placing fencing around swimming pools and retention ponds; however, consistent enforcement of your CC&R’s may be another means of prevention.
The Green Pines Association’s CC&R’s clearly do not allow street parking, yet the association has been extremely lax in their enforcement of the parking rules. In fact, cars line both sides of the narrow streets most days of the week. What happens when a child darts out between cars to chase a ball and is accidentally struck? The driver claims their visibility was hindered by all the cars parked in the road and they didn’t see the child until it was impossible to stop. Was the association negligent?
Accidents happen. It is wise to plan for the best and prepare for the worst. An association in St. Petersburg, Florida learned the hard way, when they decided against fencing their ”dry pond”. The area became a “playground” for the neighborhood children and ultimately turned into the site of a terrible tragedy claiming the life of a young girl. At the heart of the lawsuit are accusations of negligence brought against the community for not fencing the area.
Saving a few hundred dollars a year won’t seem so significant if a serious accident occurs. A homeowner’s share of an insurance premium is minimal when compared to the sizeable costs of a legal defense, court fees and a settlement.
My grandmother often reminded me not to be “penny wise and pound foolish” … she was right.
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