Must an insurer of a homeowner's association indemnify members of the association for their negligence in a common area? In some circumstances, the answer may be yes-but not in the case of Southern Owners Insurance Company v. Cooperative De Seguros Multiples.
The case began with the tragic drowning of seven-year-old in the Eastwood Community swimming pool. The child had been left with an owner of a home in the Eastwood residential community, who was a member of the Association.
The child's family sued the association and its member, claiming that the child drowned because of the member's negligent supervision and the Association's failure to operate the pool in a reasonably safe manner.
The Association and its member asked a court to declare that the Association's insurer-Southern Owners-was responsible for indemnifying the member for her liability because the accident happened in a common area. The Association's insurance policy covered each individual member of the Association for liability "arising out of the ownership, maintenance or repair of that portion of the premises which is not reserved for that member's exclusive use or occupancy."
The trial court agreed. It reasoned that the member's right to use the swimming pool was directly related to her ownership interest in her housing unit. Because the drowning arose out of that ownership interest, it granted a summary judgment that the Association's insurance policy covered the member's liability.
The Florida Fifth District Court of Appeal did not agree and reversed the summary judgment. It rejected the idea that an individual homeowner has an ownership interest in a community pool. It noted the absence of deeds, plats, covenants or other documents that might demonstrate the member's ownership interest. Without an ownership interest in the Association's common areas, the court ruled, the Association's member could not claim that the Association's insurance applied to her.
Insurers of homeowner associations can breath a sigh of relief that they may not necessarily be liable for the conduct of individual association members-but only a brief sigh of relief. While reversing the summary judgment, the court left open the possibility that the Association's member could, at trial, document an ownership interest in the Association's common areas that would require its insurers to indemnify her. And, apart from the indemnification issue, the homeowner's association in this case could still be found liable for its own negligent operation of the pool.
Insurance coverage disputes are complex and multilayered, often involving not just disputes on the merits of a claim, but also disagreement over indemnification language and policy interpretation. Pekar Law is a Tampa, Florida property insurance law firm. If you have a property insurance issue that you would like to discuss please call us at (813) 712-8762 for a free initial consultation.