Most homeowners love the idea of having a swimming pool, athletic court or  health club as part of their association's grounds because it adds value to  their property and it gives them something fun to do throughout the year. But  HOAs that offer these types of facilities may need to have supplemental or  additional insurance to cover the potential hazards that come with deluxe  amenities.  

 Insurance Concerns

 When it comes to potential high-risk amenities like pools and gyms, basic  liability coverage just doesn't do the trick. All insurance policies are not  created equal, and getting proper coverage for your association's amenities is  crucial.  

 "Anything that the association provides is an issue," John Hegarty of  Commonwealth Insurance Partners in Quincy, Massachusetts. One association he is familiar with, he says, provides a woodworking shop. “It’s a nightmare. It’s entertaining for the people who live there,” but providing insurance for such a venture is expensive, he says. Associations  that provide day-care areas, or that actually own golf courses also face  liability issues, and, therefore, potentially large insurance bills.  

 “It’s all about what an association is willing to pay for,” Hegarty notes.  

 The Deep End

 The amenity that makes association boards nervous, and which can raise an association’s premiums significantly, is the swimming pool. Since pools are also one of the most popular amenities,  boards need to be aware of the insurance issues involved.  

 "You have to make sure you have it fenced and locked, and make sure it’s in compliance with all safety rules,” says Jeffrey Cotto of Rogers & Gray Insurance Agency in South Dennis, Massachusetts. Cotto notes that insurers will take photos of the pool area to show that it is  gated and in compliance, before a policy is written. “Companies want to know that before they’ll take on the risk,” he says.  

 Pools, however, have become somewhat less of an issue since most diving boards  and slides have gone the way of the dinosaur. “You really don’t see diving boards any more. … Pools generally aren’t that much of a problem unless you have the extra stuff,” Hegarty says.  

 Of course, the experts say, proper signage should always be prominently  displayed, explaining the rules of the pool, and all town ordinances should be  followed. It's important to document everything and be honest about what the  rules are.  

 "If you're not supposed to be jumping and diving in the pool, make sure there  are signs that say 'no jumping' and 'no diving,'" says Lori Long of Community  Association Underwriters in Newtown, Pennsylvania. "If there is a shallow area,  have age restrictions. Don't let kids in unless they're accompanied by an  adult. If you have people signing in and out, keep records of who is there and  when they are there. Keep maintenance records as well, because people can claim  they got a rash or something from the chlorine—it's the simplest things that can take you down."  

 While boards may be focused on potential disasters like drownings, liability  concerns facing community associations go beyond the pool. “Some community associations have playgrounds, or tennis courts,” Cotto says. “They’re ‘attractive nuisances,’ and again, if possible you want to have locked gates and not allow kids that  don’t belong there going in to use them. You have to be proactive about it.”  

 Tennis courts alone, Hegarty adds, might not be too much of an ‘attractive nuisance’ to raise risk— but add a basketball hoop, and it’s a whole new ball game.  

 "Pools are a concern, but there are others," Long agrees. "Depending upon the  clubhouse and what amenities that clubhouse has, that can be an issue. For  instance, if they have areas for large commercial cooking and large parties and  gatherings for people coming in, that would be a concern. If they have a tennis  court and basketball court, from a premium standpoint, that's not a big hit as  long as they are maintained. A lot of people have a lot of losses on  un-maintained tennis courts and basketball courts because people can trip and  fall. When that happens, their premiums go up in general."  

 And pools, Hergarty notes, are not the only water hazards out there. “If an association is built on a pond or lake, they may be docks; that’s a big liability,” he says. Associations may also have paddle boats, kayaks or similar  recreational items to accompany their water-based location. “That’s a big issue,” Hegarty adds.  

 There are ways for HOAs to limit their liability and reduce their premiums if  they operate their amenities properly. While risk can never be totally avoided,  the use of good risk-management techniques and making prudent decisions are the  first steps in controlling losses and avoiding risk. Professional, fully insured pool maintenance and lifeguard contractors are  sometimes used to control pool premiums. There are also contractors for gyms,  snow removal, grounds maintenance and a myriad of other examples as well.  

 Money Matters

 There are really no set standards or rules of thumb for choosing liability  limits, and breadth of coverage varies from insurance company to insurance  company and should be carefully compared by a trusted insurance professional. Associations with facilities where multiple individuals can be injured in a  single event — such as in a hall that is rented out—should have higher limits than an association that only owns wide open spaces of  vacant land.  

 In addition to a regular liability policy, there are also umbrella policies and  riders that should be purchased to counter any potential problems.  Professionals recommend buying as much as your association can afford.  

 “Most associations look at $1 million to $2 million,” Cotto says, “But associations are able to buy a $10 million umbrella for a couple of thousand  dollars.” When associations ask how much coverage they should buy, he says, “We say, tell us what you can afford.”  

 While recreational areas of the community are often the most worrisome to board  members, Hegarty says that common items that fall into the category of “necessities” rather than “amenities” can be far more nerve-wracking from an insurance standpoint. Take sidewalks,  for example. With last year’s Massachusetts Supreme Judicial Court ruling regarding ‘natural’ accumulations of snow and ice, insurers are bracing for an onslaught of “slip and fall” claims. Last winter also brought an avalanche of claims related to ice dams,  hitting insurers hard.  

 In Touch

 To best stay on top of risk issues, there needs to be continual open dialogue  between the leaders and staff of a community with the "works" and their  insurance advisor.  

 “To limit costs, boards need to be well-informed,” Hegarty says. “Associations should deal with professionals in the condo marketplace—and deal with their broker regularly, to be aware of what’s happening in the industry.” Hegarty, who predicts that insurance costs are going to rise, following a  couple years of major losses—says association leaders should be communicating with their brokers at least  quarterly, and especially when anything at the association changes, to make  sure the property is properly covered.  

 “Communication is essential,” Cotto agrees. “There are no foolish questions” when it comes to the association’s insurance policy, he says. “We try to set up and meet for a semi-annual review, to attend the annual meeting  so that unit owners can ask questions. The big thing for association is to be  pro-active. Be in touch with your insurance agency. And ask questions.”  

 In the end, most boards and associations must strike a balance between the  amenities they offer their residents and the expense and potential liability  those amenities represent—not only to the board, but to every member of the community. With good  professional advice, attention to policy details, and regular reviews, any  association can have the amenities that attract new owners, while making sure  the community is protected by the proper insurance coverage.   

 Keith Loria is a freelance writer and frequent contributor to New England  Condominium.