A common question over the past few months, as you might imagine, has been, “If we get sued for opening our HOA pool, will it be covered?”

The straight-forward answer is this:
• Bodily injury as the result of a virus is specifically excluded from the HOA general liability insurance policy
• Claims for events that were an expected occurrence are explicitly excluded from the HOA general liability insurance policy
• Bodiliy injury of any kind is explicitly excluded from the HOA directors’ and officers’ liability policy (D&O)
• If a claim is made and triggers any of these specific exclusions, both the cost of defense and any indemnity would be the responsibility of the association. There is not likely to be any assistance from the insurance carrier
• In my opinion, the best thing for the board to do is to be in a position to best benefit from what an insurance carrier might contribute. That means, being able to defend the decision made. It’s easier to be defend for not opening the pool because the CDC hasn’t said it’s safe.

From a liability perspective, COVID-19 is treated no differently than the flu. The allegation would essentially be, did the HOA negligently maintain the common area, and that negligence led to injury? If you take out virus and insert trip and fall hazard, it might be easier to understand. A claimant would need to be able to point to a spot and say, “That’s where I got it.” You can’t see a virus to know it’s there, like you can a raised portion of concrete sidewalk. In order for the HOA to be liable (i.e., responsible) for an injury, the injured party would need to prove they contracted the virus somewhere in the common area. That said, it’s not impossible to imagine the allegation, and the HOA’s need to defend itself.

While the carrier, or any carrier, might exclude bodily injury from a virus, the carrier also has a duty to defend the insured. A claimant is not likely to allege only that they were harmed by COVID-19 that the HOA failed to protect them from. The allegation will almost certainly include breach of contract, breach of fiduciary duty, and negligence. These are D&O exposures, and any of them may trigger a carrier’s duty to defend the insured. If that duty is triggered, the carrier would pay defense costs and investigate the claim for proof of negligence on the part of the HOA.

I appreciate the board’s desire to open facilities as soon as possible. Following the advice of legal counsel, as well as the city, county, state, and/or national guidelines is an important step to demonstrating prudent care and making decisions in the best interest of the membership. It is also important to work with professionals and heed advice on the maintenance of common area. And remember that insurance is a part of, not the entirety of, the HOA’s risk management program. If an exposure can’t be controlled (i.e., maintained), transferred (i.e., covered by insurance), or simply accepted, then the risk should be avoided. Ultimately, if the board doesn’t want the risk of a claim that a person contracted COVID-19 from someone using the pool, or an allegation that the HOA should have had better protocols in place, then the pool should remain closed. This helps to avoid the possibility of the association paying for the many costs of the claim out of their own pocket.

Michael Berg, MBA, CIRMS, CMCA is the Owner of Berg Insurance Agency and may be reached at michael@berginsurance.com