MINIMUM LEVELS OF INSURANCE

To receive the protections afforded by Civil Code §1365.9(b), associations must purchase and maintain insurance with no less than the following minimums:

• $2 million for associations with 100 or fewer separate interests

• $3 million for associations with more than 100 separate interests

PLEASE NOTE: These are minimums; associations may wish to maintain higher limits. In addition, the insurance must be on a "per occurrence" basis.

History. Section 1365.9 was added after the Ruoff v. Harbor Creek Community Association (1992) 10 Cal.App.4th 1624 decision. Ruoff, an elderly guest of a member, sustained serious injuries falling down defectively constructed stairs. She named the association and each owner because her injuries exceeded the $1 million liability limit of the association's insurance policy.

The owners were held jointly and severally liable for her injuries and resulted in a $4 million settlement. The case sent a chill through the industry and the California legislature responded by adding Civil Code section 1365.9 to protect owners from individual liability, provided the association maintains the minimum levels of insurance described in the statute.

Updated by ADAMS KESSLER 5/7/2008