Commercial General Liability (CGL) insurance protects an association’s members from liability that may result from a person’s use of the association’s common areas. By statute, an association must carry minimum levels of such insurance for the benefit of the association’s members. (Civ. Code § 5805.) Civil Code Section 5805(b) states that a cause of action brought against a member solely by virtue of the member’s ownership interest as a tenant-in-common in the common area of an association must be brought only against the association (and not against individual members) if both the following insurance requirements are met:
- The association has one or more policies of insurance that include coverage for general liability; and
- The general liability insurance coverage is maintained in the minimum amounts discussed below.
Minimum Amounts of Coverage
The minimum levels of CGL insurance which must be carried by an association pursuant to Civil Code Section 5805 depend upon the number of separate interests (units or lots owned by individual members) within the association:
- 100 or Fewer Separate Interests: At least $2m – If the association is comprised of one hundred (100) or fewer separate interests, the coverage must be maintained in the minimum amount of two million dollars ($2,000,000). (Civ. Code § 5805(b)(2)(A).)
- More than 100 Separate Interests: At least $3m – If the association is comprised of more than one hundred (100) separate interests, the coverage must be maintained in the minimum amount of three million dollars ($3,000,000). (Civ. Code § 5805(b)(2)(B).)
