Here's an example that could play out:
A man visits the pool in his homeowners association-governed community after being closed for two months due to the coronavirus. He swims and talks with neighbors, who he hasn't seen in weeks, at a poolside table.
A few days later he is sick, tests positive for the virus and determines he must have contracted the virus while at the community pool. He decides to sue his HOA over not keeping the pool as sanitized as possible or for failing to follow public health guidelines.
The HOA now has to get an attorney to make sure they properly respond to the claim. Even if a judge didn't rule in his favor, the HOA could still be on the hook for its legal defense as a result of having a lawsuit filed against it because the HOA wasn't covered for pandemic-related claims.
"There is a lot of financial risk," said Insurance Advisor for PeopleFirst Property and Casualty Services
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There is no short answer on if it is or isn't safe for a pool to reopen.
If an HOA has a population at increased risk for the virus, it can make it more difficult for a board to decide what's best. Reopening could require paying additional staff to regularly clean the pool area in a time when budgets are tight.
But a major concern is the threat of lawsuits as a result of reopening without the ability to follow all public health guidelines to the letter. There is a good chance the insurance an HOA has would not protect them from this kind of legal claim even if there isn't a judgment ruled against the community.
HOAs have different insurance policies with their own guidelines on what is or isn't covered. Depending on what coverage is guaranteed, the risk of reopening can be high, Becker-Drunin said.
Becker-Durnin spoke as an insurance specialist and is not providing specific advice to any one policy or legal opinions to any HOA. She is speaking generally about the challenges HOA faces during the coronavirus pandemic.
Even if the lawsuit filed against an HOA doesn't have merit in the eyes of a judge, it could still be costly to defend.
"There are a lot of factors that go into claims," Becker-Drunin said. "Check out your insurance policy. You might not have coverage."
If an HOA has a population at increased risk for the virus, it can make it more difficult for a board to decide what's best.
While policies vary, typically HOAs do not have protection from pandemics or viruses like COVID-19 as it is not commonly covered in policies. This means if a board gets sued over a coronavirus issue, it will likely pay out of pocket for its defense.
And if the HOA didn't budget to pay for legal costs of reopening, it could leave the community in bad financial shape to address other issues down the road.
So a lawsuit could be catastrophic financially for an HOA, especially given budget restraints related to the virus. Insurance companies would have challenges creating an affordable policy for pandemics due to the uncertainties related with the coronavirus.
"Insurance carriers never intended for there to be coverage for pandemics," Becker-Drunin said. "Insurance carriers realized If an outbreak were to occur, financially they would not be able to provide compensation."
This is a key difference between what makes the risk of an outbreak different from other injuries you can get at an HOA pool that are included in the insurance policies.
Further, the insurance policy needs to cover all representatives of the HOA. If a manager isn't explicitly covered in the policy, that could make the legal defense even more expensive.
Typically, HOAs have "directors and officers" insurance that protects the board members from the result of their actions or inactions, but Becker-Durnin said it is important to make sure everyone affiliated with HOA is included and that the policy covers non-monetary claims.
Non-monetary claims are common, Becker-Durnin said, and typically deal with policies that homeowners are required to follow but don't have a financial cost associated with them. An example could be failure to maintain common areas, like a swimming pool, as outlined in the HOA's policies
Understanding what the director and officers insurance covers and doesn't cover is what Becker-Durnin recommends an HOA do first.
"These are claims that happen all the time for boards," she said.
Lovely is a personal injury lawyer who would hypothetically represent a person suing an HOA. Some people who have reached out to him are interested in a legal opinion on if they could sue, but no one has moved forward with a lawsuit yet.
An individual getting the coronavirus without any major symptoms probably isn't enough for Lovely to take up a case. But he said if someone died from the virus and it was traced back to a swimming pool, then he thinks a case could be made for legal action.
He is skeptical if an individual did win their lawsuit they would ever get any money, but agreed the defense costs will be the main issue for a community.
"If they're not well funded and the insurance excludes it, everyone is screwed," Lovely said. "The HOA could get a judgment against them and probably the injured plaintiff will never be able to collect on it. If an HOA doesn't have insurance, they probably can't withstand a judgment."
Moving forward, Lovely said there might be some more clarity on or waivers for HOAs or business owners regarding the risk they face reopening pools and other attractions.
It could give boards more clarity on what protections they might have beyond their insurance policy.
"That's why you're hearing a lot of talk about the next stimulus package to have some kind of waiver of liability for an HOA or business owner," Lovely said.
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