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Calling For Stephanie Brager and Marcus Faust to resign from the Board immediately. The numerous bad decisions are just too many to count. Let's start by their decision to hold the meeting at 10:00am on a weekday. This makes it impossible for anyone who works to attend the meeting. This is possibly being done on purpose so they do not have to answer direct questions from homeowners. Currently, Stephanie and Marcus, along with the rest of the board, have sent a proposal to the city of St. George to transfer approximately 11 acres of common HOA land to the city in an attempt to transfer liability from rock-fall events to the city. Their elementary method of answering questions about this is out of control. They will not disclose why they are attempting to transfer this land (although it's obvious), and just say that the meetings with the city are "secret" and homeowners do not have the right to know. As homeowners, we all have a financial interest in what the board is doing, yet they act like they are so important in refusing to answer these questions. They continue to "kick the can down the road", and never take care of this issue. In addition, I believe they feel that if they are successful in transferring this land, then all liability problems are solved, which I do not believe they are - problem is, they will not answer any questions regarding this. I really hope there is not an issue since we could all be looking at large assessments due to their inability to take care of this problem correctly.

Hopefully, everyone has enjoyed the previous assessments, because more are coming. We should never have built the clubhouse - obviously, we're living above our means.

Many of you know that for the past 7 years I have raised concern over the liability our association may face if there should be an uninsured bodily injury loss caused by a rock fall on 1450 South.

I want to direct the following to the members of the Board of Directors:

What happens if for any reason the "underlying" policy denies the claim?

First, you would look to the Excess/Umbrella liability policy for coverage. In this policy there are two parts; part A and Part B. Part A basically covers over the existing underlying policy, however, if the insurance company denied coverage under part A (if coverage for the claim did not exist in the underlying policy), then the insured would have to look to Part B for coverage. In this case, Part B excludes any loss due to earth movement, earthquake, etc.

*Somewhere I heard "It doesn't matter if our other policies deny our claim, we have an umbrella policy that covers everything". I don't recall who said this, but it simply is not true.

Now the Board of Directors has a problem.

If the Board of Directors failed to properly insure a known risk, and if at the time of a loss the carrier denied coverage on all possible policies, (Underlying, Part A Excess and Part B Excess) then the Board of Directors has a problem. Actually, they have approximately 470 problems, since all, or nearly all, homeowners would sue the board for their failure to properly insure this risk, and none of them could say they were not aware - I have been making them aware for years.

So, wait - you may say there's no problem since the Board of Directors has purchased a D&O (Director's and Officer's Policy), and the umbrella would surely cover over the D&O, right?

Wrong.

While the umbrella has a limit of $10,000,000 per occurrence, the umbrella does not include D&O in the Schedule of Underlying Insurance, meaning to say the umbrella does not cover over the D&O policy.

Now what?

Since the known risk and the problem with continual falling rocks existed before the effective date, prior acts date, and even in the event when the D&O provides "Full Prior Acts", a problem may exist with the knowledge each of the Board of Directors had when the application for insurance was completed - was full disclosure indicated on the application? Which brings up another question, was full disclosure indicated on the Underlying Policy and the Umbrella Policy?

At that time, the board of directors would have no choice other than sending each homeowner an assessment for their share of the loss, and if some homeowners are not able to pay their assessment, the assessments for other homeowners may increase.

If the carriers all decline coverage, and assessments are sent to homeowners, each member of the board of directors could very well expect to be sued by 470+ homeowners, and they may very well be personally liable.*

PLEASE NOTE: I AM NOT SAYING THAT THE PROPER COVERAGE DOES NOT EXIST. I AM SAYING THERE NEEDS TO BE CONFIRMATION THAT, CONSIDERING THE CONCERNS I HAVE RAISED, THAT COVERAGE WOULD APPLY. THE ASSOCIATION SHOULD OBTAIN A WRITTEN STATEMENT FROM AN INSURANCE ATTORNEY THAT COVERAGE FOR THE ABOVE CONCERNS WOULD BE COVERED IN OUR EXISTING POLICIES.THIS EFFECTS US ALL!

*While I am an insurance broker, I am not an attorney. Board members should consult with their attorney/attorneys regarding their possible personal liability. As I have repeatedly said, the right time to confirm these concerns is before a loss - not when you are notified of a lawsuit.

The following parts of our liability policy are those that I would ask a Liability Coverage attorney for their opinion:

COMMERCIAL GENERAL LIABILITY

CG 00 01 04 13

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

SECTION I – COVERAGES

COVERAGE A – BODILY INJURY AND PROPERTY

DAMAGE LIABILITY

1. Insuring Agreement

b. This insurance applies to "bodily injury" and

"property damage" only if:

(1) The "bodily injury" or "property damage" is

caused by an "occurrence" that takes place

in the "coverage territory";

HOW WILL THE CARRIER DEFINE “OCCURRENCE”? – SUDDEN AND ACCIDENTAL? I am concerned that since rocks have been falling for years that the insurance company, when a claim is presented, may say the loss, or Occurrence, was not "sudden and accidental", meaning it may not qualify for coverage.

2. Exclusions

This insurance does not apply to:

a. Expected Or Intended Injury

"Bodily injury" or "property damage" expected or

intended from the standpoint of the insured.

This exclusion does not apply to "bodily injury"

resulting from the use of reasonable force to

protect persons or property.

COULD WE HAVE “EXPECTED” A LOSS TO OCCUR SINCE ROCKS HAVE BEEN FALLING FOR SOME TIME? If a claim is submitted to the insurance carrier, could they say that we "expected" a claim would happen, since we know rocks have been falling for some time?

SECTION V – DEFINITIONS

13. "Occurrence" means an accident, including continuous

or repeated exposure to substantially the same

general harmful conditions.

AGAIN - HOW WILL THE CARRIER DEFINE “OCCURRENCE”? – SUDDEN AND ACCIDENTAL? Same as above

SECTION IV – COMMERCIAL GENERAL LIABILITY

CONDITIONS

6. Representations

By accepting this policy, you agree:

a. The statements in the Declarations are accurate

and complete;

b. Those statements are based upon representations

you made to us; and

c. We have issued this policy in reliance upon your

representations.

I DON’T KNOW WHAT STATEMENTS / ANSWERS WERE PROVIDED TO THE CARRIER VIA OUR RENEWAL APPLICATION, BUT THIS IS AN AREA THAT WOULD BE LOOKED AT, SIMPLY BECAUSE WE DEFINITELY HAD KNOWLEDGE, AND IF WE AVOIDED GIVING THE CARRIER CORRECT ANSWERS (IF ASKED IN THE APP) WE COULD HAVE A PROBLEM. I have not seen the renewal application submitted to the insurance company, however, I would be sure to look at any and all statements we made to be sure we did not "Omit" or "Misrepresent" and facts about the risk.

Let's get a written opinion from the insurance carrier and/or a Comprehensive General Liability Insurance Attorney. This would let us know if we need to take any action, or if the coverage we now have is sufficient.

Now that there has been a few changes on the board, maybe it's time to re-visit this issue.

If someone gets hurt / killed or if property is damaged from rocks falling from the cliffs along 1450 South, will the HOA's General Liability policy respond with defense and liability coverage?

I have presented this question to the board on numerous occasions, and honestly I don't think they even understand my concern. When I hear, "our agent said it's covered", or "the city said we're not liable", or when our attorney says, "we wouldn't be liable", I get nervous - very nervous. No one knows who would be liable until the conclusion of a trial.

Please note: I have never said our policy would not respond. I have said I'm not sure it would. Why? Because the policy is "silent" on this issue. It is not specifically highlighted in the insuring agreement, nor is it listed in the exclusions. This said, there are, in my opinion, a couple troubling parts of the policy that might limit, or exclude coverage.

What would a professional risk manager do at this point?

1. The best thing to do NOW is get confirmation from the insurance company, not the agent, in writing that they would respond to a claim - not just defense, but liability (damages for bodily injury & property damage).

2. Obtain written confirmation from our attorney stating his opinion regarding our liability. At the same time, get a certificate of insurance from him, naming our association as additional insured, of his Errors & Omissions insurance - (this includes name of insurance company and limits of liability).

3. Get written confirmation from the City of St. George stating their liability, and stating if they would defend us in the event of a claim.

It's that simple. Without it, we simply do not know if there is coverage or not. Collecting people's verbal opinions is meaningless.

I know that some board members (some current, some past), felt that they knew more about insurance that I do. Some felt attacked when I asked the question, and it was obvious to me that they felt that they had to know more, and accepting help was somehow admitting defeat. You all have seen these type of people, but it's just too important to not get this right - before a claim.

Some also believe their "loss assessment" coverage included in their Homeowner's policy would protect them. This is not the case - don't rely on false statements. If a claim were to happen, and the association's policy did not respond, the claim does not just "go away". There is a good chance that we, as homeowners, would still be responsible for the claim via an assessment. Personally, I would like to avoid this possibility.

You cannot rely on your Loss Assessment Coverage on your Homeowner's policy to pay for Assessment claims due to the HOA not purchasing the correct coverage for this exposure.

There are many variables, but likely the coverage that would be required is earthquake, earth movement, or landslide.

IF YOU DON'T HAVE THIS COVERAGE ON YOUR HOMEOWNER'S POLICY, LOSS ASSESSMENT COVERAGE WILL LIKELY NOT RESPOND TO A CLAIM.

I have been in HOA meetings when board member(s) told homeowners that if the HOA's policy did not respond to a rock fall claim that the HOA would assess all homeowners their share, and "not to worry" because "your homeowner's policy will pay the assessment". This is not true. This might be a good time to have this discussion with your agent.