Considerations for Residents’ Associations
The subject of Insurance is often raised by Residents’/Ratepayers’ Associations (RA’s) who are members of FoNTRA. Some RA’s are Incorporated/some are not. Of the incorporated RA’s, some do not have any insurance; some have Directors & Officers Liability (D&O); some may also have Commercial General Liability (CGL). The cost of the insurance is a significant challenge to arranging coverage for many RA’s.
On the benefit side to having insurance, it covers the RA and its Directors, Officers and, possibly, volunteers for a range of potential legal liabilities, including claims arising from injuries/accidents at public events. It can also serve as insurance coverage that will be requested when renting or using a third party facility (such as a meeting room in a church). Increasingly, third parties are requesting such insurance coverage. As well, potential Board Members will often question whether or not the RA holds insurance, as they want to be protected from the risk of lawsuits for their volunteer efforts. We live in an increasingly litigious society and the frequency of lawsuits (legitimate or not) has skyrocketed over the past 25 years.
Another benefit to having insurance is that legal fees incurred in defending a lawsuit are included in the insurance coverage. Even if a RA is not found ultimately liable for a CGL or D&O claim, the defence costs incurred may well be in the multiple thousands of dollars. Without a policy in place, the RA and/or Directors/Officers will need to cover the legal expenses out of their own pockets.
Review this resource document for a discussion of CGL and D&O policies as they apply to non-profits:
- Insurance Coverages Nonprofits and Charities Need to Understand, David Hartley, manager, Insurance & Liability Resource Centre for Nonprofits.
For more detailed information and advice on CGL and/or D&O policies, your RA should consult a licensed Insurance Broker and/or a Lawyer.
In April, 2018 FoNTRA surveyed member RAs to determine what insurance arrangements the RAs currently have, to get feedback on their opinions on the need for insurance coverage and to find out if they were interested in being given information to pursue obtaining insurance coverage.
Responses were received from 23 RAs – of these, 20 are incorporated. Ten of the incorporated RAs carry Directors & Officers Liability and of those, eight carry Commercial General Liability insurance as well. Please note that the principles governing unincorporated organizations are different from those governing incorporated organizations and legal advice might be helpful.
For the RAs that have Directors & Officers Liability, the Limits of Insurance values range from $1,000,000 to $5,000,000 with premium costs ranging from $500 to $1200. Commercial General Liability limits also range from $1,000,000 to $5,000,000 with premium costs ranging from $500 to $1,800.
If an RA is interested in discussing the 2018 insurance survey, please contact Geoff Kettel.
FoNTRA has spoken with the following brokers who would be pleased to talk with your RA about possible CGL and/or D&O coverage and costs:
Cade Associates Insurance Brokers Ltd.
4800 Dundas St. West Suite 100, Toronto ON, M9A 1B1
Canadian Insurance Brokers (Daniel Goldhar)
1 Eglinton Ave E, Suite 415, Toronto ON, M3P 3A1
Direct: 416-583-5854 Main: 416-486-0951
R. Robertson Insurance Brokers Ltd. (Greg Robertson)
150 Bridgeland Ave #203, North York ON M6A 1Z5
416-780-9906 (224) / 877-489-9906