You may have read recently about the homeowners association in Las Vegas in which a teenage resident was severely injured in a playground accident (see the July/August 2018 issue of CAI’s Common Ground Magazine, pages 20-25).
The jury rendered a $20 million verdict for the plaintiff, which overwhelmed the HOA’s liability insurance policy limit of $2 million.
The community may wind up settling the case for a lesser amount than the verdict. The Board reportedly has also commenced an action against its insurance carrier for not acting in the HOA’s best interest by settling the case pre-trial or pre-judgment. However, whatever the ultimate outcome, there are important lessons to be learned from this extreme, but not necessarily unforeseeable, incident.
For those of you who are not CAI members, or if you missed the Common Ground article, we feel it is important enough to note the following:
- The accident apparently occurred when a piece of the playground equipment collapsed and hit the youth in the head, causing serious damage. While amenities are great for resale values and for maximizing enjoyment of the common areas, they also come with an obligation for the facilities to be properly maintained. Playgrounds, swimming pools and fitness centers are some of the most obvious, but by no means the only, locations where equipment must be inspected on a regular basis by qualified experts to ensure safety. Any questionable conditions should usually mandate closure of the facility until a full investigation is performed and any needed repairs are completed.
- While many (although not all) communities have lifeguards at the pool, few employ monitors at playgrounds or in exercise rooms. However, the Board is still responsible for monitoring these areas to some extent. If the Board “knew or should have known” that residents (or even non-residents) are misusing these facilities, such as entering the pool area when the pool is closed, teenagers or adults using playground equipment designed for toddlers, or people using exercise machines in an unauthorized manner, the Board must take effective steps to curtail such inherently dangerous behavior.
- Boards should also revisit their insurance policies at least annually with an experienced community association insurance expert to make sure coverage and policy limits are appropriate for the community and its amenities. Insurance premiums are often one of the most expensive items in a community’s budget and the temptation is to seek out insurance companies offering low rates. Those low rates, however, may mean less coverage. Lowering your community’s annual insurance premiums will not look like a wise move if a subsequent injury is not covered sufficiently, or at all, by the policy.
Community Association Boards have two central responsibilities: safeguarding their residents and practicing fiscal responsibility.
A well-maintained community will go a long way toward preventing accidents. If/when an accident does occur, a properly designed liability insurance policy will protect the community’s resources. Boards need to stay vigilant on both fronts.
If you do not have access to Common Ground Magazine, let us know and we will forward a copy of the article to you.
