Cost of Litigation Now a Reality, ‘Higher Than Expected’ | TheUnion.com

Cost of Litigation Now a Reality, ‘Higher Than Expected’

Lake Wildwood Board of Directors

The Board voted on approving the new insurance vendors and funding in the July 11 meeting.

The cost of litigation has now become a reality for the Association, and it is higher than we expected.

The Association has three main areas of insurance: general business insurance like general liability, property, and auto; Directors’ and Officers’ (D&O) insurance that covers the Directors and volunteers; and an umbrella policy that insures for amounts over the levels of the general and D&O coverage.

Our overall insurance package has increased from about $200k to $300k and the new umbrella policy does not cover D&O.

We will need to secure additional coverage for D&O. actions by our insurance carriers after the budget approval leaves us with the need to meet this additional funding demand from our board contingency and operational savings.

In keeping with our goal of transparency we want you to understand the connection between the ongoing litigation and these increased costs.

We had the unfortunate E. coli incident in 2017 involving guests using Commodore Beach and a resulting lawsuit.

This lawsuit remains open even though we have substantial data pointing to the geese as the carrier and we have taken actions to correct that situation.

Because of the potential financial risk from the lawsuit our umbrella insurance provider chose to non-renew our policy going forward.

They will still be responsible for the current incident. However, their action put us in the position of finding a new carrier and the options were few and expensive because of the known E. coli experience. The result was a 300% increase in our umbrella policy. This is the major driver of our insurance increase.

In several communications from the GM and the Board we have explained the situation regarding two lawsuits by members and the impact on Association legal costs and insurance. The lawsuit regarding vacating a Board member last year for code of conduct violations is ending and the judge has ruled in our favor.

The two plaintiffs continue to pursue their case with a recent petition to the court for reconsideration raising our legal costs and again taxing our relationship with the insurance carriers.

The second suit is challenging the Association establishing rules prohibiting short term rentals. That case is on hold and the court ruled in our favor on a recent injunction filed by the plaintiff. These two cases have mainly impacted our D&O insurance situation and have had some impact on our umbrella policy.

Administration and the Board of Directors are managing the lawsuits and the insurance coverage very closely. The increased costs will be funded within the current budget, but it will involve managing priorities.

Just remember, in the end these lawsuits have a cost to all of us in the Association.


Start a dialogue, stay on topic and be civil.
If you don't follow the rules, your comment may be deleted.