Homeowner Association Insurance Specialists
Commercial General Liability Insurance Coverage
Commercial General Liability ("CGL") insurance policies protect the association for damages sustained in the common areas such as slips and falls. California Civil Code Section 5805 protects owners from individual liability, provided the association maintains at least minimum levels of insurance as follows:
• $2 million for associations with 100 or fewer separate interests, or
• $3 million for associations with more than 100 separate interests.
Meeting minimum levels of insurance may, however, not be sufficient. Even though owners are not directly liable for a loss exceeding insurance limits, they are indirectly liable. Assuming a $5 million judgment against an association, owners would be responsible for a special assessment to make up the difference between a $2 million policy and the $5 million judgment. Boards should talk to their insurance brokers to determine appropriate levels of insurance for their associations. A $5, $15, $20 million umbrella policy is relatively inexpensive and it is common for associations to purchase such policies. Also, homeowners should individually purchase loss assessment coverage in the event a loss exceeds the association's policy limits resulting in a special assessment.