Insurance

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Thief
FACTS

David Jensen, a longtime municipal judge, respected civil servant, and owner of an insurance company embezzled more than $40,000 from his homeowner’s association (HOA) in the last three years.  This is the second case of this nature in Wisconsin that I have seen in the last four years.  How did the HOA discover the thefts?  According to the Lake Geneva Regional News, Jensen had been treasurer of the HOA for 11 years and after his death on February 8, 2020, the new treasurer found a number of financial discrepancies.  The HOA contacted the police, who investigated the facts and after speaking with Jensen’s wife determined that Jensen “acted alone in the thievery.”  Because of Jensen’s death, no criminal charges will be brought.…
Continue Reading Director & Officer Theft of Funds–Your Community Association Needs Fidelity Insurance

Risk
Summary

The US Court of Appeals for the 4th Circuit held that a subrogation waiver provision in a construction contract barred an association’s insurance company from seeking to recover from an allegedly negligent contractor.

Facts

United National Insurance Company v. Peninsula Roofing Company, Inc.:  Pelican Beach Condominium (“Association”) needed a new roof. The Board, after obtaining specifications from an engineer, entered into a contract with Peninsula Roofing (“Contractor”).  The contract was a standard form AIA contract that is widely used throughout the country.  Peninsula Roofing placed a generator in the Association’s parking garage from which the contractor ran extension lines to power its tools. The generator caught fire and caused about $3 million dollars in property damage. …
Continue Reading Association Construction Contracts – What are Risks of that Waiver of Subrogation Term

Association Academy: Insurance

How much insurance should your HOA or condo carry? Are your directors and officers covered? What happens in the unlikely event of a disaster? Please join Husch Blackwell’s Condominium and HOA Law Team and guest speakers Erica Joyce and Ryan Maloney, as they discuss critical insurance issues every board member, manager and unit owner needs to understand.…
Continue Reading Association Academy: Insurance – September 11, 2019

Fire Sprinklers
Summary

An insurance company can’t sue a condominium tenant in subrogation, even if they were negligent in starting a fire.

The Facts

The Declaration required the association to “obtain and maintain a … policy of all risk property insurance” for the association.  The Declaration also required the policy to name as insureds the unit owners and their bank mortgage holders (Mortgagees) and that “any insurance maintained by the association shall contain [a] ‘waiver of subrogation’ as to the Units and Mortgagees.”  Finally, the Declaration also prohibited the owners from obtaining fire insurance and required all occupants and tenants to comply with the Declaration.

One of the unit owners leased its commercial unit to the tenants (Defendant). The lease did not specify who would carry fire insurance.  …
Continue Reading Insurance Subrogation – Not Against A Condominium Tenant

Facts: The facts in the case of Forrest v. The Ville St. John Owners’ Association, Inc., No. 2018-CA-0175 (La. Ct. App. Nov. 7, 2018) are straightforward.  In March of 2016 there was a fire.  It damaged common element and the Forrest unit.  The Association had two insurance policies: one for Property and one for Community Association Management Liability Coverage.  The Property policy was issued by Lloyd’s of London. Lloyd’s paid on its policy, for both the common element and unit damages, but the funds were insufficient to repair the common elements and the unit.  So the Association repaired the common elements.

Trial Court: The unit owner, Forrest, filed suit against the Association alleging breach of fiduciary duty and various other claims under state law.  …
Continue Reading Insurance is NOT all the Same-Another Case Proving Why You Need an Insurance Committee

IMPRESSION: The ruling in Great Am. Ins. Co. v. State Parkway Condo. Ass’n, No. 17-cv-3083 (N.D. Ill. Sept. 11, 2018), should serve as a cautionary tale to Condo and HOA boards.

DETAILS: In Chicago, a unit owner of a condominium located at 1445 North State Street filed an Illinois state discrimination claim in 2007 against the State Parkway Condominium Association (“SPCA”) for failure to accommodate his hearing disability during SPCA Board meetings.  The SPCA defended the claim under its 2006-2007 Non-Profit Management and Organization Liability Insurance Policy (“policy) issued by Travelers Casualty and Surety Company of America (“Travelers”).

A settlement between parties was reached in September 2007; but six months later, the SPCA sued the same unit owner in an entirely unrelated matter. …
Continue Reading “Related Wrongful Acts” Can Exhaust an Association’s Liability Insurance Policy Limit

Issue:  If your association was destroyed by fire or some other hazard, and it did not make sense to rebuild, how would the funds be divided?

Problem.  Odds are that you don’t know the answer.  The fact that you don’t know should scare you.  Is every unit in your association worth the same amount?   I doubt it.  Do you each pay the same amount in assessments?  Does that control?  What does your declaration say about the distribution of insurance proceeds if the unit owners elect not to rebuild?  Do you understand what it says? Does it even make sense?…
Continue Reading Why You NEED to Amend Your Association Declaration Insurance Provision Before You Have a Loss

Building Fire

In Illinois, a Court recently ruled on a Condominium Association’s attempt to charge back an insurance deductible to one of its members (Gelinas v. Barry Quadrangle Condominium Association, 74 N.E.3d 49 (2017)). This particular association had a fire originate in an owner’s unit resulting in damage to not only the specific unit, but the entire building. The Association made a claim with its insurance company and received reimbursement for the necessary repairs to be made. The Association then held a hearing and levied an assessment against the Unit Owner in whose unit the fire originated.…
Continue Reading Special Assessing an Insurance Deductible Back to a Unit Owner

Lazy Guy on Couch

This issue arises more than one might suspect. Because of association apathy, many committees go unfilled and often even boards don’t have members.  The results of this apathy could be much different than you would expect.

Facts.  In a 2017 case, the relevant property “was subject to a 1996 restrictive covenant that required the approval by an architectural control committee [‘ACC’] before any building … could be erected.”  The ACC consisted of two named persons within the documents, one of which was dead and the other refused to act.  The owner of the property filed a declaratory judgment action seeking to have the court declare the covenant unenforceable based on impossibility of performance.  Other property owners objected, claiming the covenant could be made enforceable by modification.  The documents did not provide a means by which new members could be added to the ACC.…
Continue Reading What Happens When All Committee Members Resign, Refuse to Act or Move?