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Maine Alliance for Road Associations

Liability Insurance

  • 08 Aug 2012 10:15 PM
    Message # 1042380
    Deleted user

    In reviewing the discussions there isn't anything current that clearly defines the requirement for liability insurance.  We are a Nonprofit Road Association, what are other associations of this type doing now with regards to insurance?  Are board members covered by current legislation?  Do we only need to have liability insurance?  If sued is our liability limited to only the current assets of the association?

    Dave

  • 09 Aug 2012 8:29 AM
    Reply # 1042733 on 1042380
    Deleted user
    We are a Mutual Benefit Non-Profit Corporation since 1988.  We also have never had liability insurance.  In the past, inquiries with insurance companies have resulted in huge premiums so we have not purchased it.  Our Association is a bit different from most.  We have 22 miles of road and two bridges, so, the underwriters viewed us more like a municipality.  I spoke with a company yesterday who should be getting back to me soon and I will update with that information.  This time they seem to understand that the insurance is for the Executive Board and Directors.  If someone were to sue the corporation, we would loose our meager savings and go bankrupt.  No deep pockets there.  If then, the suit attempted to collect from the Corporate leadership, then we should be protected.   I am hoping the underwriters view this as similar to an umbrella policy which are fairly inexpensive.  Will let you know what they say and if it is positive, let everyone know the company we are inquiring with.   
  • 09 Aug 2012 2:28 PM
    Reply # 1043019 on 1042733
    Deleted user
    THOMAS DECOSTE wrote:We are a Mutual Benefit Non-Profit Corporation since 1988.  We also have never had liability insurance.  In the past, inquiries with insurance companies have resulted in huge premiums so we have not purchased it.  Our Association is a bit different from most.  We have 22 miles of road and two bridges, so, the underwriters viewed us more like a municipality.  I spoke with a company yesterday who should be getting back to me soon and I will update with that information.  This time they seem to understand that the insurance is for the Executive Board and Directors.  If someone were to sue the corporation, we would loose our meager savings and go bankrupt.  No deep pockets there.  If then, the suit attempted to collect from the Corporate leadership, then we should be protected.   I am hoping the underwriters view this as similar to an umbrella policy which are fairly inexpensive.  Will let you know what they say and if it is positive, let everyone know the company we are inquiring with.   
    I have received a response from the insurance agency.  This applies to our Non-Profit Corporation which has Officers and Directors (President, Secretary/Treasurer, and 3 Directors).  If they can equivocate to a Statutory Road Association, I am not sure.  
    Bottom line cost (in our Association's case) -
      $640/yr   $500,000 liability
      $800/yr   $1,000,000 liability
    There are of course other options and costs should they be necessary. 
    So, if my Association chooses to purchase ( I hope so ) the Officers and Directors are covered to the extent of the policy.  This includes legal defense costs.  If you wish to contact the person I spoke with, he is:

     Chris Austin, AAI

                          F.A. Peabody Company

    792 Main Road North ∙ Hampden, ME  04444

         Office (207)990-2400 ∙ Cell (207)694-0891

                                Fax (207)990-2402

                

    -Tom

  • 10 Aug 2012 8:39 AM
    Reply # 1043523 on 1042380
    Anonymous member (Administrator)

    The "Leadership Manual on this site (click on tab above) contains guidance on this issue. Associations should be sure any potential insurer understands the law. 

    From the Leadership Manual:


    >>>>

    Potential board members must be identified. Some may have liability concerns. What liability does road association board membership bring? Does an individual forming or helping form a road association put his or her personal assets at risk or is there limited liability? Prior to 2009, unlike non-profits, associations formed under the statute did not have the civil liability protection of a corporation, namely that individuals such as directors and officers acting for the corporation were not personally liable if their actions were undertaken in good faith at the behest of the Board. This could be a stumbling block to the recruitment of people to serve on the Board.

    A 2009 bill grants limited immunity in some circumstances to board members. The 124th Legislature passed a bill granting officers and directors limited immunity from liability by owners or lessees of other lots for activities carried out in performance of their duties, such as determining repairs and maintenance to be undertaken, materials furnished, collection of money, and awarding of contracts.

    Road associations should take other measures to reduce personal liability. Associations formed under the statute should be able satisfactorily to reduce the risk of being sued if they are especially careful to hire contractors who carry their own liability insurance so that the association will not be liable for damages caused by defects in work done on the road.Volunteers working on the road are not immune and should be careful to confine their actions to routine maintenance work unlikely to lead to personal injury if not properly performed (grading, ditching and filling potholes.)

    There is no immunity for violation of environmental laws. Associations are not immune from enforcement actions for violations of environmental laws under the jurisdiction of the DEP or a municipality.

  • 18 Oct 2012 10:51 AM
    Reply # 1107211 on 1042380
    Deleted user

    We are researching the need for liability insurance and have found that the Landowners Liability Law exists which provides landowners with protection for a broad range of recreational activities on their land. The law also provides protection for landowners for the "entry of and passage over private roads and lands in order to pursue any of these recreatioanl activities".  With the protection that this law provides it leaves two other areas of liability concern..Directors and Officers and liability for commercial road users such as delivery people and contractors.  I would like more information on what coverage is provided in the 2009 law that provides limited immunity for Officers.  In regard to commercial people and/or contractors, would they be covered under workers compensation or their own firms insurance for injuries they might suffer in using our association roads (ie like falling when exiting their vehicles)?

    Thanks for any information you can provide.

                            The Maine Alliance for Road Associations


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