While you might appreciate all the opportunities that come from being a member of the board of directors for your Homeowner Association (HOA), you are also afraid of what happens when one of the local homeowners decides to take an issue to court. You and the rest of the board will have to discuss how to deal with something that can be potentially very damaging to the association.
Personal injury is a common lawsuit many HOAs experience. Homeowners could see any slip or fall on their property as failure to upkeep the area. In the event that your board is sued for damages, you should prepare yourself by reviewing different areas of the lawsuit to eliminate or reduce any costs that could come with the lawsuit.
Is a board member singled out?
Some Missouri homeowners that sue their HOA try to receive coverage from different areas. They name several individual board members they think are responsible the accident regardless if they were truly liable or not.
However, most plaintiffs that try this are rarely successful because the court will likely not side with them if there are no specific culprits. Prosecutors hesitate to take on some HOA lawsuits because they like to choose cases where the liability is clear. If the homeowner can properly single someone out, then the HOA will have to spend more time preparing the defense.
Are the board members properly insured?
The HOA receives protection from personal injury and damage claims by general liability insurance. However, there is little to no protection from this for individual board members considered liable.
Each member of the board should be familiar with the HOA’s Directors and Officers (D&O) insurance. This policy protects each member if they acted wrongfully as individual or on behalf of the association. A well-designed D&O insurance can reimburse you for the lawsuit expenses and any litigation costs, so it is important to check how the policy works in your HOA.
Is a different attorney required?
Most HOA boards have their designated attorney to handle any legal issues. If the HOA as a whole is being sued, this lawyer should be called in to provide assistance. However, whether the lawyer should be used to represent individual members can vary.
The insurance company can compare the interests of the individual and the HOA to determine if the member should seek legal aid elsewhere. Depending on the HOA’s insurance policies, the member might not be able to protect themselves with HOA insurance if they go for a different lawyer.
Whether you want to protect yourself individually or your HOA board, it is important to review everything about the case and your HOA’s insurance policies to ensure that you will not go into the lawsuit unaware of how to handle it.