Timothy Cline Insurance Agency, Inc.
Homeowner Associations »
Introduction
A Commercial Umbrella (also referred to as an “excess
liability policy”) provides catastrophic coverage for
large liability claims which exceed your underlying liability
insurance – or, in some cases, to provide an effective
replacement for underlying liability policies which become
reduced or exhausted by loss. While umbrella can be written
in increments of $1,000,000, $2,000,000, $3,000,000, $5,000,000,
$10,000,000, $15,000,000, $25,000,000 (up to $250,000,000),
minimum limits of $5,000,000 are recommended.
Background...
In 2002, 1.5 million lawsuits were filed in California [Source:
2003 Court Statistics Report by the Judicial Council of California]
It seems that nearly any one who is injured now seeks a “responsible
party” (or, if not responsible, at least a deep pocket)
for the potential of a high-dollar settlement.
Are homeowners association a likely target of such litigation?
Absolutely. The courts see homeowners associations as corporations
(albeit non-profit) with millions of dollars of assets, and
have held the Association culpable for injuries and property
damage related to maintenance of the common area. For years,
Boards of Directors of homeowners associations have been strongly
advised to purchase additional liability protection. Because
of the broad coverage and relatively low cost, this additional
liability coverage is often not purchased on the underlying
general liability policy or Directors & Officers Liability
coverage, but rather in the form of an “excess” policy,
called a commercial umbrella.