After the shooting of Travon Martin in February, association lawyers discussed the possibility that the Retreat at Twin Lakes Homeowners Association could face liability for the actions of George Zimmerman, a member of the HOA’s neighborhood watch.
It appears that Martin’s family will be making a claim against the HOA’s insurance policy, asserting they are owed at least $75,000.00. This indicates the Martins may intend to file a federal court suit against the insurance company. The policy’s limit is $1,000,000.00, but the big issues will be whether the policy provided coverage at the time of the shooting, and whether it covers the shooting at all.
Insurance policies are full of exclusions and limitations, many of which can be removed by payment of additional premiums. The HOA’s insurance coverage – which went into effect over a month after the shooting – excludes coverage for deaths made as part of a claim for wrongful employment practices.
Did the HOA "employ" Zimmerman as contemplated by the insurance policy? This is a matter that will likely be litigated. If the insurance company is not obligated to cover the loss, the Martins will likely seek compensation from the HOA and potentially, the individual board members.
This is a stark reminder for all board members to carefully consider the consequences of permitting owners to take voluntary action for the association. If a volunteer causes a problem – by re-routing a drainage pipe, misinforming another owner, or even causing physical harm to someone – that volunteer may not be covered by the association’s insurance.
Any plaintiff will seek coverage from insurance first – the insurance company has the deepest pockets and the greatest ability to make a payment. If there is no insurance coverage, the association will likely be the next target, simply because it has the ability to aggregate the regular assessment payments of its members into a significant lump sum. This, however, also means the association may not have the funds to complete capital repair projects, or even regular maintenance and operations. It can lead to special assessments, increased owner defaults, and foreclosures – things no one wants in their association.
If your association is interested in permitting owner volunteers to take action, contact your insurance agent. Ask about obtaining coverage for these volunteers, and make sure that you are clear as to what actions are covered and what actions are excluded. If the association is not willing or not able to obtain insurance coverage for volunteers, it should seriously consider prohibiting the actions to protect itself and its membership.