Association Risk Management

What We'll Cover

• Litigation trends
• Insurance coverage
• Handling claims
• Dispute Resolution

Some Caveats:

• Statutes v. Governing Documents
• Oregon Law v. Washington Law

Nuclear Verdicts

TJ v. University Community Association

• Tree branch on common property falls, injuring minor child.
• Evidence showed that Board knew of tree issues at least 3 years prior
• $14 million jury verdict

Thompson v. Lamplight Village

• Association maintained playground equipment on common property
• Swing set was recalled, new swing broke twice before.
• Board refused to pay for maintenance contract
• Jury award of $10m in compensatory damages, $10m in punitive damages

Schnurr v. JL Property Owners Assoc.

• Cyclist injured on common area bike path
• Alleged that Board knew or should have known of dangerous condition
• Jury verdict: $41 million

Primary Risk Exposure

• Property
• Liability
• Net Income
• Personnel Losses

Identifying Risk

• Surveys
• Financial Statements
• Records/Files
• Flowcharts
• Inspections
• Experts

Paying Losses

Risk Retention

• Pay losses from operating
• Funded reserves
• Borrow

Risk Transfer

• Contractual Transfer
• Insurance

Contractual Transfer

• 3rd party vendor contractors
• Indemnity & Hold Harmless Agreements

Negligence

• OR v. WA
• Duty
• Breach
• Causation / Proximate Cause / Foreseeability
• Damages

Insurance

Types

• Property
• Liability
• Directors & Officers
• Fidelity

Insurance Terms

• Declaration page
• Policy limits
• "Occurrence"
• Covered Loss
• Duty to Defend
• Duty to Indemnify
• Tender

Who is Covered?

• Board (collectively)?
• Board members (individually)?
• Manager?
• Committee members?
• Volunteers?

Common Property Insurance Exclusions

• Earth movement
• Government action
• War
• Water damage b/c of seepage, flood, or subsurface water
• Wear and tear
• Pollutant cleanup

Dispute Resolution

• Mediation
• Arbitration
• Litigation

Common Liability Exclusions

• Intentional Injury
• Contractual liability
• Liquor

Tips for Managing Risk - P.1

• Adopt deductible resolution
• Review insurance coverage annually
• Rely on experts
• Perform regular property surveys
• Carry umberella policies if possible

Tips for Managing Risk - P2

• Identify maintenance, insurance, and replacement obligations