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VALUABLE INSURANCE
FEEDBACK
 I received valuable feedback from two insurance specialists on topics covered in recent newsletters. The first one involved balcony inspections. To refresh everyone's memory, the statute for balcony inspections only applies to buildings containing three or more multifamily dwelling units.
The reader's association had 40 balconies but the configuration of their buildings meant they were not required by statute to inspect them. My recommendation was to inspect the balconies anyway. It is less expensive to inspect them than to defend against lawsuits in the event someone is injured. -Adrian
Balcony Inspections. Insurance specialist Joel Meskin wrote: This involves an issue and question I receive often. I agree with your response and recommendation.  However, I would add the following. When an association is not required to comply with a statutory requirement as with Civil Code § 5551 that does not mean they have satisfied their fiduciary obligation.
Under the example of the wrongful death, there would be no coverage under a D&O policy because of a bodily injury exclusion. Furthermore, depending on whether the board, manager, or an employee knew that a balcony could collapse, that may preclude coverage under the general liability policy as this would not be a fortuitous incident. The association will still be insured, but it will be “self-insured.” As your recommendation indicates this is really a cost benefit analysis. -Joel W. Meskin, Esq., CIRMS, CCAL FELLOW, MLIS, EBP. Joel is the Managing Director of Community Association Products & Risk Management McGowan Program Administrators – Specialized Insurance Programs.
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The second issue dealt with paid architects assisting architectural committees. It was my recommendation that if an association could afford to have a licensed architect help review applications, they should do so. It could save them a lot of problems with owner submissions and potential legal expenses.
 Architectural Committee Members. Joel Meskin wrote: I agree with the use of a paid architect on the committee, or even an unpaid board member who may be an architect.
However, the board and architect need to be aware that no professional is covered under a D&O policy.
The architect in this situation, would require his or her own professional liability (aka errors & omissions) policy. The D&O is a management liability policy that provides coverage for an insured when he or she is challenged or sued in his or her capacity of a board member. -Joel Meskin, CIRMS, McGowan Program Administrators
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 The third issue is where a reader asked if it was a breach of the board's fiduciary duties, a misuse of funds, and embezzlement for the board to spend association funds on a holiday party. My response was that monies spent on barbecues, bingo nights, etc. benefited the community even if some members attend and others do not. My recommendation was that members not be a Grinch, and support community events.
BBQ and Beer. Insurance specialist Terri Guest wrote: As always, I adore your newsletter. However, I must caution you on that Barbecue Party flyer! It appears that the HOA will be providing the beer, which could lead to liability issues. Usually, the general liability policy for the association will cover alcohol at association events as long as the HOA is not in the business of brewing, selling, or otherwise making a business out of the alcohol.
It is highly recommended, though, to hire a bartender to serve the alcohol and for that bartender to carry insurance which names the association as additionally insured. That adds a layer of protection for the association and board of directors in case anything gets out of hand. -Terri Guest, CIRMS, CMCA, EBP, Berg Insurance Agency, Inc.
Love. Love your newsletter. -A.N.
Welcome Back. You provide a tremendously valuable service by making HOA directors and members better educated, for a better governance. This newsletter is an immediate read when it pops in my inbox. (Former HOA board member and President.) -Leland B.
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DISCLAIMER. Our newsletter provides commentary, not legal advice. Boards need to retain an attorney to review all the facts and give a legal opinion on the issues they face. We serve as corporate counsel to California associations only. Request a proposal to represent your association.
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