Maine Alliance for Road Associations
New road association here....Ocean View Acres road association in Saint George Maine.
We have operated without any insurance for 20+ years with no issues. Now there is a push to get general and officers and directors liability insurance. I've been working on getting quotes and it looks like a $2000 per year expense for us which is significant. What are the possible scenarios where insurance is needed? Our association is 1 mile of private dirt road with 28 properties and 23 houses...only about 4 full time houses the rest are summer only and 3-4 are short term vacation rented in the summer. The association is for the road maintenance its not a HOA. Trying to understand the need since we have survived all this time without it.
I am new to this but understand our coverage is important to defend and indemnify the Members and the Officers from claims for negligence e.g. hiring unqualified contractors, ignoring unsafe hazards, directing surface water onto someone’s property, embezzlement, etc. It also covers the potentially high cost of legal support. It is important to have both 1. General Liability coverage and 2. Directors and Officers coverage.
A fellow landowner, guest, service provider, delivery person - anyone using your road - could sue each landowner or member individually for damages (e.g. bodily injury, property damage). Am no expert, but understand your own homeowners insurance would not cover claims against you for your role in a road association, whether it be merely as a member or as an officer of the organization.
This could be an example highlight one risk ( but am not suggesting in any way that this road association had any responsibility)
From my limited experience, it seems like insuring a road association does not fit cleanly into a "category" so some carriers treat it as a "townhouse homeowners association" that doesn't own any property. Appears to be expensive, but may be very important in rare circumstances. It may be an important factor to someone's willingness to serve as an officer of the road association.
Hi Tim, thank you very much for your reply, it was very helpful. we have the situation you describe, one of our board members will not serve if we don't get insurance and its a difficult sell as we have operated fine without it for 20+ years.....but with todays sue happy mentality, you never know what will happen.
If you type "Insurance" into the Forum Search Box, you will get a number of discussions on this topic. Pay attention to the dates - there is one from last year entitled "Insurance Agent and Managing Sales" which should be fairly current information on agents and prices.
Patten Pond Road Association has a liability policy from MMG Insurance through JT Rosborough in Ellsworth. Annual premium is $400. Covers 36 owners and about 1.5 miles of road. $2,000,000 aggregate, $1,000,000 per occurrence. It is not directors/officers policy. I believe Title 23 offers some degree of limited liability to a statutory road association's directors..
Yes, the statute does give SOME protection under 23 MRS 3101 subsection 7:
7. Immunity from suit. A commissioner, board or owner of a parcel of land who undertakes activities of a road association under this subchapter is immune from civil liability in all actions by owners or lessees of other lots for the following activities:
A. The determination of repairs and maintenance to be undertaken; [PL 2009, c. 238, §1 (NEW).]
B. The determination of materials to be furnished or amount of money to be paid by each owner for repairs and maintenance; [PL 2009, c. 238, §1 (NEW).]
C. The collection of the money from each owner; and [PL 2009, c. 238, §1 (NEW).]
D. The awarding of a contract authorized under section 3103. [PL 2009, c. 238, §1 (NEW).]
But notice that it only protects the Board from actions by "owners or lessees of other lots," and only for certain actions. It does not protect the board from actions by members of the public outside the road association, or from actions for injury or damage to property. That's where subsection 9 comes in:
9. Insurance. A road association under this subchapter may purchase liability insurance to defend and indemnify the road association's officers, directors and owner members for any and all claims of liability or violation of law concerning the private road, private way or bridge and may include the costs of such insurance in the determination of each owner's share of the total cost under subsection 5.
The Maine Alliance for Road Associations