In the wake of the O’Brien decision, and, it appears, independently, the issue if insurance and proper coverages seems to be the topic of the day.  I have on a number of occasions discussed the need for having adequate general liability insurance.  I have also discussed in previous columns the complexity of the association’s master casualty policy and its interplay with the Unit Owners policy, the issues of fault, deductibles and similar items.  Thus, let me turn to some of the lesser known or utilized coverages and their importance.  First, let me provide a shopping list of coverages that an association should consider having in place.  I hasten to add, this is not necessarily an exhaustive list, nor does it deal with some of the subtle differences between one company’s policy and another’s.  Rather, it is intended as a check list for a more thorough review and discussion with your insurance agent and/or consultant.  Here then is the list:

                        casualty insurance

                        general liability

                        directors and officers liability

                        fidelity

                        workmen’s compensation/employer’s liability

                        non-owned automobile liability

                        flood insurance

                        earthquake insurance

                        boiler and machinery insurance

Of this list it is likely that all but the workmen's compensation/employer’s liability and the non-owned automobile liability are familiar.  Flood insurance will not be an issue for your association unless you are in a flood plane.  Those of you who are, are all too familiar with this coverage and the recent, significant premium increase resultant from changes made by the Federal Emergency Management Agency (FEMA) to the National Flood Insurance Program (NFIP).  Similarly, earthquake insurance is generally ignored in this area, though such may not be particularly prudent as New England does lie on some active fault lines.  Boards might well be advised to obtain quotes, particularly for buildings in high risk areas.  The other four coverages have been discussed on numerous occasions.  So why then do I focus on these two remaining coverages?
            As to workmen's compensation/employer’s liability most boards respond, “But we have no employees.  Why do we need this?”  Unfortunately even though you may think you have no employees the law may not agree.  The controlling test of whether or not someone is someone else’s employer is control.  If you have the right, whether exercised or not, to control substantial aspects of a person’s job, you can be considered their employer.  Thus, if the board has the right to terminate the on-site manager who is “employed” by its managing agent, set the work hours, instruct him or her what to do and how to do it, a court could well consider the person your employee.  This becomes critical when your managing agent turns out not to have its own workmens compensation policy.

            Another possible situation is where a contractor on your property fails to have workmens compensation insurance and one of its employees gets hurt.  Under applicable law, that employee can look to the association for coverage.  This is why most associations general liability carriers insist that you obtain certificates of workmens compensation insurance from contractors.

            All these concerns can, however, be put aside with the purchase of what is commonly referred to as a basic, no employee policy.  For some very short dollars (usually in the vicinity of $500.00-$750.00) you can obtain a policy which says, though you really don’t have any regular employees, just in case the situation arises where you are deemed to be an employer you are covered.  This is critical coverage in that if you are an uninsured employer, the injured worker need only prove that he was injured at work to collect damages.  Fault or negligence is not an issue.  In other words, if you are deemed an employer and your deemed employee gets hurt at work and you have no workmens compensation coverage you are strictly liable for their damages, including pain and suffering.  All this can, however, be avoided by purchasing indicated coverage. 

            Non-owned automobile insurance is similar.  It provides the association with protection against liability to third parties injured by someone driving their car on association business.  The law provides that a person is responsible for the wrongs committed by their agent while in the course of pursuing the principle’s business.  Thus an association could be liable if a board member while driving to a meeting with the association’s attorney strikes another car or a pedestrian, etc.  This is what we call vicarious liability.  With a community association the most common circumstance which exposes the association to this liability is automobile accidents.  Since the driver may have minimal coverages, having at least a one million non-owned automobile liability policy is wise, particularly since it is, like the workmen's compensation policy discussed above, very inexpensive.

            It may be that the association’s general liability policy would cover such scenario.  This you should check with your agent.  the safest course, however, is to have this specific coverage. 

            Often boards look to insurance coverages as a way to trim the budget to keep condominium fees low or from rising.  This I suggest is being penny wise and pound foolish.  Bear in mind that the Massachusetts Condominium Act makes every unit owner personally liable for their proportionate share of the debts and obligations of the association.  No one wants to be the person who has to inform their fellow owners that there is a six or seven figure uninsured liability.  As time goes on associations are more and more being viewed by courts as entities operating and managing residential real estate.  With this the bases of liability keeps expanding.  Adequate insurance thus becomes even more critical - adequate not just in amounts but also in scope.