A Colorado federal court judge recently issued an important decision addressing community association insurance issues. We expect this decision will assist community associations to secure insurance benefits under liability policies where claims are made alleging inadequate repair and maintenance.
Commercial general liability (CGL) insurers occasionally deny any obligation to provide a legal defense or to pay for damages involving lawsuits arising from repair and maintenance of common areas. Every insurance policy is worded differently, but some insurers take the position that claims do not arise from an accident or unintended event, because the Association made certain intentional decisions about repair and maintenance before the accident. The insurers claim the intentional decisions mean that the conditions on the property and ensuing accident did not arise from an unintentional or fortuitous event.
This stance can lead to situations where a community association is forced to pay for its own defense instead of having the insurance company pay the defense and settlement of any claims.
This precise issue was recently presented to the United States District Court for the District of Colorado. Judge Matsch rejected the insurer's arguments that Association decisions about the manner, method and timing of repair and maintenance removed any ensuing claim from the definition of an accident or occurrence under the applicable insurance policies. The Judge ruled that the Association was entitled to a defense paid for by the insurers, because the ultimate cause of the damage (in this case, storm water arising from weather events) fell within the definition of an accident or occurrence.
Please feel free to contact us concerning your insurance related issues at 303.432.9999.