Each community association should operate as a non-profit business with an important goal in mind: PROMOTING THE HEALTH, SAFETY AND WELFARE of its community. In order to achieve this goal, your community should have a comprehensive risk management plan in action. A comprehensive risk management plan can reduce the association’s liability and exposure as well as make it more attractive to investors, lenders and owners for a variety of reasons.
One of the first steps to making a risk management plan is to have an open dialogue with the Association’s legal counsel, insurance agent as well as the property manager. This team can help you identify the potential exposures to loss, create a plan of action to eliminate or reduce those exposures, then engage in the creation of systems as well as documents to streamline the maintenance process for your evaluation and most importantly, assure your members that your community is proactive and safe.
As an experienced attorney, I am able to help identify the potential risks that may lead an Association into a costly litigation that could have been easily avoided with the proper counseling. For an example, let’s say an Association has a maintenance worker on staff that handles the day-to-day maintenance of the common areas including the pool, sidewalks, street signs, etc., and the worker is also responsible for making minor repairs to limited common areas. Unbeknownst to the maintenance worker, there is a broken latch on the back gate that leads to the pool area. The maintenance worker regularly checks the area but he never uses the back gate for his inspections. Unfortunately, an unsupervised minor child wonders along one day and finds his way to the pool through the back gate. Needless to say, the Association will likely be liable for any harm or damages to the minor child.
Practical Approach to reduce the Association’s liability in this scenario:
• The Creation and Usage of daily maintenance logs that would require that each entrance/exit is secure and in a working manner each day
• If a latch is broken, it should be fixed immediately. If you are unable to fix the latch immediately, the area should be secured from ingress/egress until the latch can be fixed
• Ensure that the pool is included as covered structure within the Association’s insurance policy
Generally, the Association cannot completely eliminate its liability or exposure; however, it can certainly take proactive steps to reduce that risk with the proper counseling, planning and maintenance. Ultimately, this can help reduce insurance claims which may reduce the Association’s insurance premiums!