Insurance May Not Cover for COVID-19-Related Claims Arising from Use of Reopened Common Area Facilities

Community association managers and board members are accustomed to dealing with unrealistic expectations of residents. As common area facilities – particularly swimming pools – have been closed in response to public health orders and liability concerns related to COVID-19, conflicts are continuing to occur relating to whether such facilities can legally and safely be reopened. There are many issues to consider, including whether an association will be able to comply with applicable orders and guidelines issued by federal, state, and local authorities. These orders and guidelines are not always uniform, and are changing frequently with developing science on risk factors for exposure to the virus.

Many have observed that science is not the only factor affecting changes in policies regarding the virus; politics and public opinion have also resulted in differing approaches to risk assessment and reduction. Strong opinions are being expressed, often with righteous indignation, on all sides of virus-related issues. Many board and managers will have already received “demands” that common area facilities be reopened – immediately! “We pay for the pool! If we can’t use it we shouldn’t have to pay assessments!  We won’t live in fear! We’re adults and don’t need your protection! Guidelines aren’t laws!” Other residents don’t want to get close to any common area facilities until we have a better handle on the virus.

The uncertainties and conflicting points of view present an ongoing challenge to boards to balance the interests of owners, residents, and the association itself. One very important consideration is whether COVID-19-related claims will be covered by the association’s insurance. The answer is: probably not, so caution is warranted.

While we haven’t seen yet seen any COVID-19 claims or resulting denials of coverage, it appears likely such claims resulting from use of common area facilities may arguably be subject to typical coverage exclusions or limitations. General liability insurance policies often exclude or limit coverage for claims relating to communicable diseases or viral, biological, bacterial or microbial infections and hazards.

While it may be difficult for a claimant to prove that they were infected through use of common area facilities, associations and board members will still be required to defend against such claims. There are limitless potential scenarios a COVID-19 claim might present. Any claims will need to evaluated on a case-by-case, fact-specific manner. But if there is no potential for coverage under the insurance policy, the insurer may have no duty to defend the claim. This could present a real financial burden, since the association will have to fund its own defense, even if the claim is unsuccessful. If the claimant wins, the association could be on the hook for the judgment.

On the other hand, it’s possible the association or board members could be sued by members claiming common area facilities should be (or should have earlier) reopened. Claims not involving personal injuries may potentially be covered under the association’s “D&O” (Directors and Officers) insurance policy. We’ll know better once such a claim is presented.

Decisions about reopening facilities should be made based on applicable public health orders and guidelines, rather than pressure being applied by owners and residents. Boards must keep up to date on applicable orders and guidelines so that risks can be balanced and addressed appropriately based on the best available information. Associations are required to comply with public health orders, and from a risk management standpoint should comply with all applicable guidelines, as they will serve as the minimum standards for evaluating whether the association met its standard of care to act reasonably in the management of the common area. Associations should consult with their insurance agents and should review their existing policies carefully. Kriger Law Firm can assist associations and managers in navigating these uncharted waters.

Steven Banks, Esq.