Regarding Liability and Insurance

Hi Everyone-

I have some new information to share that I think we will all benefit from knowing.

One of the biggest objections or concerns I am hearing is the issue of liability and the cost of insuring a pool. Apparently this has been the biggest issue that has come up in past attempts to get a pool (or so many of us have been led to believe).

I contacted a commercial insurance agent with Barnard-Donegan today (Chris Stansel). He has had extensive experience in underwriting policies for HOAs such as ours. What he told me really surprised me considering that the board members at our last meeting kept citing insurance costs as a kill factor for a pool.

Chris explained to me that most HOAs (or POAs) already have a liability policy in place (and yes, The Pinnacle does too), especially if the neighborhood has any kind of amenities. If a neighborhood should decide to build a pool, it will add approximately $100 per year to the existing policy.

This sounded ridiculously inexpensive to me, so I asked more questions and here is what I found:

A typical liability insurance policy for HOAs will include around $1 million in coverage. This generally covers accidents, injuries, etc…related to neighborhood-owned amenities. If someone gets hurt playing tennis on our courts and sues, then this policy would cover it.

Surprisingly, these types of policies are not very expensive (The Pinnacle paid $3,637 in 2009) – and here is why: As members of a POA, we are OWNERS. We not only own our homes or lots, but we also own the amenities in our neighborhood. Therefore, the liability insurance policy does not cover injuries, accidents that happen to owners…..because YOU CANNOT SUE YOURSELF.

So what is the purpose of having an insurance policy? It is to cover the liability where non-owners (guests) are concerned. In simple terms, if you (an owner) get hurt playing tennis on the neighborhood courts, the neighborhood is not liable because you cannot sue yourself. However, if you bring a guest to the tennis courts and he/she get hurt, he/she CAN sue The Pinnacle (YOU). In that scenario, our insurance policy would pay. Because the majority of amenity usage is by owners, the policy premiums stay low.

The addition of a pool is simply the addition of an amenity and does not significantly impact insurance premiums. There ARE certain things that need to be done with the pool in order to “CYA” (aka: reduce liability). These are such things as signage (“Swim At Your Own Risk”, etc…), self-locking gates, fencing, depth markers, etc…

I also asked if having a lifeguard impacted insurance rates at all and the answer is “no”.

I don’t know about you all, but I find this entire bit of information extremely interesting. It is very apparent that in the past, no one has actually researched the insurance cost of a pool and just assumed the liability was just too great. At this last POA meeting each board member kept “pooh-pooh”-ing the idea of a pool, mainly giving the reason insurance costs would increase too much. Well, that is obviously incorrect and this is something that we need to make sure and address when the question comes up during the surveys.