Types of liability insurance for associations
Q. Our association is considering a change in its liability insurance carrier. We currently have what I understand is a “claims made” liability insurance policy. We are considering changing to an “occurrence” insurance policy. Can you explain the difference between these two types of insurance policies? Is there a risk in making a switch from a “claims made” policy to an “occurrence” policy?
A. A “claims made” insurance policy covers claims that are made during the term of the policy. The loss can occur before or during the policy term, so long as the claim is made during the term of the policy.
An “occurrence” insurance policy covers losses that take place during the term of the policy. However, a claim under an occurrence policy can be made during or after the term of the policy, so long as the loss occurred during the term of the policy.
Changing from a “claims made” policy to an “occurrence” policy could leave a gap in coverage. This happens when a claim is made after the expiration of the “claims made” policy and during the term of the “occurrence” policy for a loss that occurred during the term of the “claims made” policy.
A “tail” endorsement to the old policy can generally be procured to cover that gap. The board should speak with its insurance agent/broker about these issues before making the switch.
Q. You have mentioned in your column that board are required to meet at least four times a year. A couple of years ago, the board of our association voted to change the number of meetings from 4 to 3.
Can you please tell me where to find this regulation in print that governs the required number of board meetings?
A. Section 18(a) (10) of the Illinois Condominium Property Act provides that “(t)he bylaws shall provide for at least the following: (10) that the board shall meet at least four times annually. Similarly, Section 1-30(a) of the Illinois Common Interest Community Association Act provides that “(t)he board shall meet at least four times annually.” Copies of these laws are generally available on line if you use those statute names in your search description.
Q. One of the board members of our Illinois condominium association owns a condominium in Arizona. He says that his Arizona condominium association charges a substantial (thousands of dollars) transfer fee that is collected at the closing of the sale of a unit. Can an Illinois condominium charge a transfer fee of this sort?
A. In Arizona, there are specific statutes that authorize the imposition of a “transfer fee” by an association, if certain criteria are met. One of the several criteria is that the governing documents must grant authority for the fee and provide for a specific purpose for the fee. There is no similar statutory authority in Illinois to charge a transfer fee.
Q. The rules for our association established a time line for candidates to submit a candidate form for the annual meeting. I submitted a candidate form for the association’s annual meeting a few days after the deadline. This was still before any proxies or ballots were printed and before any election materials, like the notice of meeting, proxies, and candidate forms were issued to the owners. Nonetheless, the board refuses to send my candidate form to the owners with those of other candidates, and my name will not be printed on the association’s proxy and ballot for the election. Is the board acting properly here?
A. The board’s actions are absolutely defensible, especially since this election issue is dealt with in the rules for all to see. If the board extends the deadline for you to submit a candidate form, it would arguably have to advise all owners that the deadline for solicitation of candidates has been extended, and provide all owners the same opportunity to submit a “late” candidate form.
Do note that you could probably undertake a write-in candidate campaign, and distribute election materials to the other owners yourself. You could also solicit proxies from other owners. It’s difficult, but not impossible, to be elected as a write in candidate.
• David M. Bendoff is an attorney with Kovitz Shifrin Nesbit in the Chicago suburbs. Send questions for the column to him at CondoTalk@ksnlaw.com. The firm provides legal service to condominium, townhouse, homeowner associations and housing cooperatives. This column is not a substitute for consultation with legal counsel.