Policies with an aggregate limit of $4 million but a $2 million single occurrence limit do not satisfy the statute for developments with more than 100 separate interests. Because of the language found in Civil Code §5805(b), "Any cause of action in tort..." associations wishing to limit owner liability should maintain the prescribed limit "per occurrence" and not rely on an annual aggregate.
Aggregate Limit. The maximum coverage under a liability policy during a specified period of time usually one year or the policy period regardless of the number of separate losses that may occur. Losses paid under coverage limits which are subject to aggregate limits reduces the amounts available for future losses.
Commercial Umbrella. An umbrella policy can be used to meet the coverage requirement. If the underlying policy together with the umbrella satisfy the per occurrence limits, the policy would satisfy the statute.
Recommendation: Since insurance carriers have different internal standards and policies, associations should verify with their insurance broker that their coverage meets or exceeds statutory requirements.
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