Summer Fun & Liability

Today’s community associations are offering popular and enjoyable ame­nities for social activities that appeal to all ages, from very young to more mature residents. This is especially true during hot summer months when residents have more leisure time. Fostering a sense of commu­nity is always a priority for both small and large associations that take great pride and satisfaction in making their community a more desirable place to live. In addition, members often invite guests into the com­munity in hosting seasonal parties or activ­ities.

Playgrounds and exercise rooms have been a mainstay for many years, but now asso­ciations are sponsoring yoga classes and allowing residents to hold fitness classes in community buildings. Traditional com­munity picnics have turned into festive events as communities offer everything from moon bounces to water features at the pool. Roof top amenities have become a new trend, which can feature anything from pool parties to grilling for social gath­erings. As fitness and healthier lifestyles have grown in importance, associations are supporting a wide array of creative new amenities and social activities that serve this admirable goal. As demand for these addi­tional amenities has grown, and as associ­ations have responded, the attending risks have also grown, often in ways that can be difficult to anticipate.

All of the activities that help to make com­munities vibrant and fun, are also increas­ing associations’ exposure to liability claims and potentially placing the community’s assets at risk. These risks should never pre­empt a community from offering social ac­tivities, but the risks should be analyzed as an important part of the planning process by committees and boards. Assessing risk and addressing risk carefully should occur before the summer fun begins.

This analysis falls under the general head­ing of Risk Management. Risk Management starts with these steps as your community begins planning and implementing com­munity activities;

  • Risk avoidance – Elimination of the hazards, activities, and exposures that can negatively affect the association.

In considering an activity or event, an asso­ciation should consider whether it presents unacceptable hazards to the participants. Special consideration should be given to events involving children or consumption of alcoholic beverages. Both of these charac­teristics can drastically increase the poten­tial for liability, and special care should be used in assessing safety measures to be im­plemented in these cases.

  • Loss Control – Prevention, which in­cludes safety inspections of commu­nity property where events are being held including evacuation in case of severe weather events.

Events that take place outside are suscep­tible to emergency conditions relating to weather. A contingency plan should be a part of the planning, and protocols should be in place well in advance for decisions leading up to the event. Thunderstorms in the summer are always a concern.

Preventing and controlling risks should be an essential part of the planning process for associations. Using checklists and set­ting up a safety and health component will ensure that these activities and events are successful and uneventful. CAI offers many resources for insurance and risk manage­ment online through publications.

  • Risk Transfer – Most exposures can be transferred to an insurance compa­ny or other third party.

Insurance programs offer very broad cover­age currently, so most of the activities that are the subject of our discussion will be cov­ered by general liability insurance included in any professionally designed program. Never hesitate, however, to run an activity by your insurance representative if there is any question. Further caution should still be observed, because a negative occurrence involving injury will affect future insurance costs.

Often, liability can be transferred to a third party, such as vendors. Associations should seek confirmation of vendors’ insurance coverage. Through a contract, a hold harm­less agreement indemnifying the associa­tion from claims arising out of the vendor’s activities, can be achieved. The contract should also grant additional insured status to the association under the vendor’s insur­ance.

Consult your legal advisor and insurance professional for suggestions and guidance before and during the planning process. Some insurance policies contain language that excludes bodily injury, personal in­jury, and property damage during certain risky activities including moon bounces. Coverage should be confirmed prior to the scheduled event to determine who is pick­ing up the insurance coverage. If you are conducting activities like renting a moon bounce or other inflatables, consider hiring the vendor’s staff to operate and supervise the use of this equipment during operation. This would reduce the chance of injury and transfer the risk to the professionals in place of the association. Look for companies who understand the needs of community asso­ciations, and are knowledgeable on how to run safe and fun community events. Beware of companies that offer to drop-off inflat­ables without setup and offer no supervi­sion, which could lead to tragic outcomes for a community. You don’t want to make the local news due to poorly executed plans, which lead to images of flying moon bounc­es being blown around as a result of a gust of wind. Again, summer holds significant weather related hazards, including heat waves which can cause heat exhaustion and can be deadly. Lightning deaths are at their peak during the summer and should a con­sideration.

Special Event Insurance can transfer risks for associations who rent their clubhouse for weddings and other special events. Homeowners can purchase this insurance from many homeowner carriers and com­munity association insurance specialists. Special Event insurance should be required for events where alcohol is being served and where there is a risk of alcohol being served to underage guests. Hiring security may also be another option to ensure a safe event.

  • Risk Retention – When risk cannot be transferred, it is retained by the as­sociation.

In these cases, special consideration should be given before undertaking an event. If it is “uninsurable,” there is probably a good reason. Absent insurance, the association’s assets are on the line.

Risks are all around us, but should not dis­courage communities from holding events or planning social activities that promote a strong sense of community. Prudent risk management will assure that activities are safe and that the association is properly pro­tected in the event of an unlikely injury.

By Ron Bridge
Ron is vice president of Weaver Bros. Insurance, specializing in community associ­ations for the past 32 years. He is a member of both Maryland and Virginia Legisla­tive committees, and past president of The Washington Claims Association.

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