Condo Policy Inquiry [CA]
I have a question regarding the personal liability section of my condo policy. It states: “If a claim is made or a suit is brought for damages due to bodily injury or property damage covered by this policy, caused by an occurrence, we will…” followed by a list of actions we will take.
However, there is an exclusion noted when it comes to assessments issued by the association board. It says that “liability assumed by any insured under any contract or agreement to pay special assessments levied against the condominium owners by the governing rules of the condominium” is not covered. Interestingly, this exclusion does not apply to losses under Coverage D (Loss Assessment), which affects the entire complex rather than individuals.
The problem arises from the fact that the board applied the governing rules incorrectly in their decision to issue assessments. They seem to have taken this action in response to members posting about HOA issues on social media, which is actually protected under CA Civil Code § 4515. Additionally, they have made questionable claims about being a “private corporation” and that all business information is confidential.
The assessments were not paid due to the dispute, and now the board has initiated court action for collections.
So, if a homeowner chooses not to pay the assessments because of the board’s questionable actions, and the board is now pursuing collection, can the homeowner file a claim with their insurance company regarding the board’s actions without being subject to the exclusion?
This is a complex situation involving both insurance policy language and the specifics of your dispute with the homeowners association (HOA). Here are some key points to consider:
Understanding the Exclusion: The exclusion regarding liability assumed under a contract or agreement to pay special assessments means that if you’re being sued solely for failing to pay the assessment itself, your insurance likely won’t cover it. Insurance typically doesn’t pay for voluntary debts, including unpaid assessments.
Loss Assessment Coverage: Coverage D (Loss Assessment) might offer some protection if the assessments relate to a significant loss affecting the whole complex, rather than individual disputes. If the assessments you’ve received come from a board action that they incorrectly justified, this could potentially be a factor; however, that coverage is specific to certain types of loss, not necessarily applicable to your refusal to pay.
Malicious Action and Defense Costs: If you believe the board is acting maliciously, you might have grounds for a claim based on the situation’s specifics (especially if you can prove this through documentation). However, your insurer will likely evaluate the situation based on the policy’s terms and conditions.
Submission of Claims: The key consideration is whether the board’s action crosses over from a mere collection of the assessment to a liability claim actionable under your policy. If your insurance company deems the board’s lawsuit to stem from your defense of a constitutionally protected right or wrongful assessment, there may be grounds for submitting a claim. However, it ultimately depends on their interpretation of the events and your policy.
Consult a Professional: Given the nuances of your situation, including the potential legal implications of the HOA’s actions, it would be wise to consult with an attorney who specializes in homeowner association disputes or insurance claims. They can provide targeted advice on how best to proceed, considering both your rights and the implications of the insurance policy.
In summary, the relationship between your debts to the board and your insurance policy’s exclusions is complicated. Clarifying that with a professional is your best next step.