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Question: We were given notice by our insurance carrier that they would no longer be providing mold and fungus protection. If we can't get anyone to cover mold and fungus, how are we going to protect the HOA from lawsuits?

Answer: Mold and fungus are now excluded from many HOA insurance policies because the courts have handed out substantial awards against HOAs related to health problems mold cause. The HOA can prevent lawsuits by paying close attention to mold remediation. Mold is not that hard to detect. In 99% of the cases, smell alone indicates its presence. Locating the mold source is a resident's responsibility as well as the HOA's. Often it's in an accessible space like the attic or crawlspace.

Once informed of the problem, the HOA should take corrective action as soon as possible so negligence can't be claimed. Hire only licensed contractors trained in mold abatement. Mention the mold issue in your newsletters and request residents to call if a moldy, musty smell is detected. Mold is a health hazard that should be treated seriously. If the HOA does treat it seriously, there likely will be no legal issues to contend with.

Question: I’m confused about insurance policies that are based in "claims made" versus "per occurrence".

Answer: A Claims Made policy only covers claims during the period the coverage is actually in force. A Per Occurrence policy covers a claim even after the coverage is no longer in force, subject to your state's statute of limitations which varies from state to state.

If you plan to stay with a particular insurance company forever (or they don't cancel you), a Claims Made policy will work because coverage is always in force. But what if a claim is filed the day after a Claims Made policy expires or doesn't renew for whatever reason? Unless the premium difference is significant, a Per Occurrence policy is the way to go.

Question: Our Board President was laid off recently. She does a lot around the complex like meeting with vendors and cleaning up trash. She has been lobbying to get paid for her work. Is that okay?

Answer: Unless your governing documents are different than most, board members may not be compensated for work done on behalf of the association. The President would have a huge conflict of interest since it's the President that oversees contractors and employees. If she resigns from the Board, that will eliminate that particular problem but there is another practical consideration: Hiring a neighbor is a formula for disaster. If performance doesn’t live up to expectations, she would have to be fired and likely be resentful. It’s not worth risking a fragile relationship.

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