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Why Local Associations Need Protection
All local lake associations have
exposures to claim or lawsuits in the following area:
General Liability
General Liability exposures include
bodily injury or property damage to third parties.
Claims can be small nuisance lawsuits or they can be
large, multi-million dollar allegations involving injury
or death in which the association was somehow negligent.
Examples of general liability claims are as follows:
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A child is injured while
playing art your associations picnic.
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A guest gets ill from food
provided at an association meeting.
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A person drowns while
swimming at premise owned or maintained by
the association.
Even if the association was not
negligent in any of the above cases, an
individual could still claim negligence and
begin a lawsuit, which the association would
then have to defend against in court. These
types of lawsuits can result in thousands of
dollars in defense costs and take years to
settle.
Directors & Officers Liability
Directors & Officers Liability
exposure include "wrongful acts" allegedly committed by
directors and officers of the association. Since claims
usually include allegations of wrongful acts, some
examples are as follow:
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Mismanagement allegations
(failure to carry out objectives of the
organization).
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Misappropriation of funds to
administrative costs which should have been
allotted to providing services.
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Improper
expenditures/imprudent investments of lax
management of organization's assets.
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Breach of employment
contract.
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Conflict of interest.
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Exceeding authority granted
by charter or by-laws.
Even when allegations are weak,
defense costs can be very expensive.
Auto Liability
Auto Liability exposures include
bodily injury or property damage to third
parties while operating a vehicle on association
business. An example of an Auto claim would be
an officer accidently injuring a child while
parking a car at an association picnic. Even
though the officer's auto policy would probably
defend him or her, the insurance company has no
duty to defend the lake association.
Miscellaneous
Other exposures may include, but
are not limited to, claims in areas of Workers
Compensation, buildings, personal property,
bonding, large watercraft or aircraft, tools and
equipment, computers, libel or slander, valuable
papers, money and securities, special events
(i.e. festivals) and products liability.
As you can see, lake associations
have liability exposures that are numerous and
diverse and they can result in tremendous
litigation, defense costs and settlements. These
cases may take years to settle and may bankrupt
the organization or individual. Insurance can
help prevent there negative results.
MLSA Questionaire
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