Q&A: Would We Be Covered

A group of unit owners in my building formed a committee in reaction to some rules the board made. We’re worried we might get into a lawsuit with the board, and we want to know if the association’s insurance would cover us against this kind of liability. Would building insurance cover us for litigation fees?

—Unsure in Chicago

“From the context of your question, and for purposes of this answer, I am assuming that

you are not a member of the Board of Managers (Directors) of your association,” says James A. Erwin, an attorney and founding partner at Erwin & Associates, LLC. “If that is the case, then the association’s insurance policies do not cover your actions. They will not provide a defense for you or cover your legal fees should you be sued by the board.

“On the other hand, if you sue the board, depending on the facts of the case and the nature of the allegations made against the board, the association’s insurance policies may cover the board’s defense. If so, and if you prevail in the underlying cause of action, then there does exist the possibility that the association could be found liable to you for your legal fees, in which case the association’s insurer might also have to cover those fees. However, the factual circumstances which would give rise to such coverage is extremely narrow and this possibility should not be relied upon when making a decision on whether or not to challenge the rules.

“In Illinois, regardless of whether you are a member of a condominium association or a common interest community association, the board has exclusive authority to promulgate rules and regulations. Those rules are binding and enforceable so long as they meet certain criteria including that the rules be clear, reasonable, not in conflict with the governing acts, the declaration or the bylaws, that they be adopted by proper board action with proper notice to the ownership and that they not be applied retroactively.

“Owners may make inquiry, protest and even challenge rules by court action if the board has failed to comply with the foregoing requirements. If you follow proper protocol, there should be no basis for the board to sue you simply for questioning rules promulgated by the board.”

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