BARNEGAT/WARETOWN, NJ – Governor Phil Murphy took some time in announcing that pools could open for the summer. Like other parts of the state, residents in both Barnegat and Ocean Township welcomed the news. Many began the steps to comply with New Jersey’s COVID-19 Outdoor Pool Standards. So, how come so many pool gates remain closed?
The short answer arises from an insurance issue. During the SARS outbreak in 2002, insurance companies began inserting a pandemic exclusion into their policies. No one really paid much attention. Until now.
Throughout Ocean County, over 55 communities are commonplace. Homeowners associations (HOAs) set the rules for them, as well as condo associations and others that are not aged restricted. They also arrange for liability insurance for common areas and shared amenities – such as swimming pools enjoyed by residents.
In the case of HOAs, General Liability Insurance covers injury claims for things like slip and fall accidents on common grounds. The idea that someone might sue claiming they contracted COVID-19 in the community pool strikes many as outrageous. After all, how could it be proven?
A lawsuit does not need to be successful to create economic havoc. The mere filing of a claim starts the problem. It could put an entire community and HOA officers at huge financial risk. Based on the pandemic exclusion, the insurance company could even deny legal representation.
Attorney Steven B. Kotzas of the Toms River law firm, Berry, Sahradnik, Kotzas & Benson represents a number of homeowner associations. He has had the unfortunate task of advising his clients against opening their pools.
“The problem starts with underwriters that calculate insurance premiums,” explained Kotzas. “They don’t factor in pandemics since they’re excluded. It’s also too late to request a special endorsement at this point.”
According to Kotzas, the few carriers that do allow for pandemic coverage will not add the endorsements now. The concept mirrors purchasing flood insurance because property is located in a flood zone. The insurance must be in effect before something like Superstorm Sandy hits the region. While the coronavirus crisis remains an issue, no one is writing new policies that cover liability claims for it.
Some have suggested requesting waivers from anyone who wishes to use the pool. Communities would still follow the standards set by the state. They would also follow suggestions from the CDC in operating and managing their pools.
“Waivers are against public policy,” Kotzas shared. “They discourage litigation but are not foolproof.”
Andy Pignatelli is the president of the HOA for Pheasant Run in Barnegat. Last year, he fought hard to get a heater for the community’s outdoor pool. He was looking forward to opening the pool for the summer.
“The decision not to open the pool was one of the most difficult ones we’ve had to make as a board,” Pignatelli admitted. “However, we had to look out for the 379 homeowners in our community.”
If someone makes a claim against an HOA, the burden of paying for legal representation would fall on the individual homeowners. Any settlement or court judgment would also result in substantial assessments to residents.
In the meantime, some think the government should grant immunity from civil liability. After all, Murphy granted immunity to nursing homes and healthcare workers by executive order as part of the state of emergency.
“Immunity in this situation would need to be done by legislative action,” advised Kotzas. “It could come by either state or federal statute. Ideally, it would come from both houses on the federal level.”
State representatives for New Jersey’s 9th Legislative District were contacted earlier today for comment. They had not yet replied at the time this article went to press. However, Congressman Andy Kim, who represents the Third Congressional District shared his position.
“I’ve spoken with policyholders across New Jersey who have been blindsided by gaps in insurance coverage during the coronavirus crisis,” said Kim. “There’s no doubt that this crisis has put many businesses and organizations in tough and unexpected positions.”
“This is a moment, much like 9/11, that requires real action on the issue of insurance coverage,” Kim continued. “Congress should work together in a bipartisan way to explore solutions, such as public-private partnerships, to ensure we limit gaps in coverage while keeping the costs for policyholders low.”