Limited Immunity from COVID-19 Transmission Liability Claims

In the last week of its session the NC General Assembly passed House Bill 118, which applies broadly to businesses, nonprofits and individuals, including planned community and condominium associations. Gov. Cooper signed the bill July 2. Now, associations will not be liable as a result of ordinary negligence in any claim brought by someone who claims to have contracted COVID-19 while on HOA or condominium common areas. 

Speaking to NC senators June 10 in support of limited liability for owners’ associations, CAI-NC President Hope Carmichael told legislators: CAI has confirmed with multiple insurance carriers the common policy exclusion in HOA insurance policies for claims related to COVID-19. Volunteer boards of directors across NC are trying to make the best possible decisions for their communities. But these volunteers are faced with the tough choice of denying members access to their commonly owned amenities or risking what could be devastating legal costs to defend potential claims, even if the boards are following all of the recommended guidance for opening their pools and facilities.”

House Bill 118 gives some reassurance for associations in light of the growing awareness that general liability and directors & officers insurance policies almost universally exclude coverage for claims arising from pandemic, virus, and disease. However, associations should be aware that gross negligence, willful or wanton conduct or intentional wrongdoing would still subject an HOA to potential liability. This might include a reckless disregard for following local and state guidance on reopening swimming pools or other amenities, so it’s important to be diligent about compliance with all state and local Executive Orders and decrees. The law requires an association to “provide reasonable notice of actions taken to reduce the transmission of COVID-19 on the premises.” Once that notice is provided, the association will not be liable for the failure of individuals to follow the rules or guidance called for in the notice. This provision in the law makes the posting and publication of detailed rules and guidelines extremely important in the association’s liability protection.

See the full language for HB118 here.

by Hope D. Carmichael, Esq., CAI-NC Chapter President, and fellow of the College of Community Association Lawyers.

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