In many neighborhoods across Philadelphia, community groups are the backbone of neighborhood volunteerism, organizing events, improving safety, coordinating cleanups, and so on. They’ve played an important role in development for many years as well, hosting meetings for projects requiring a variance and relaying neighborhood feedback for consideration by the ZBA. When the new Zoning Code came out in 2012, community groups, or RCOs as the code says, became formally tied into the zoning process, with new rules and structures to attempt to create some uniformity across the city. Having been to countless community zoning meetings across town since then, we can say it’s been a bit of a mixed bag. But maybe we’ll figure it out, eventually.
As we’ve joked before, it’s incredibly easy to start an RCO. But running an RCO comes with some significant risk, specifically that individuals serving on the board of an organization can be held liable for that organization’s activities. As RCOs play a major role in the zoning process, and a letter of support vs. a letter of opposition could be the difference between thousands in profits or thousands in losses, there’s some very relevant exposure there for the members of RCO boards. That’s why every RCO with any sort of a budget invests in Directors & Officers liability insurance. D&O insurance indemnifies an organization and its board members against costs of legal actions against them. Premiums are usually between $500 and $2000 per year. Seems like a good investment, right?
The problem comes after an RCO has been sued a couple of times. Premiums and deductibles start to soar, assuming any carrier is even willing to write a policy. Back in 2013, after several lawsuits, Old City Civic disbanded after they couldn’t find a carrier willing to offer them D&O insurance. But we don’t believe this problem has befallen another RCO since. So we were, of course, quite troubled last week when Plan Philly reported that Bella Vista Neighbors Association was facing a similar situation.
The story is a little convoluted, but here’s the short version: someone brought a lawsuit against a neighborhood resident in a property dispute, and even though the neighborhood group had nothing to do with said dispute, it was still named because the person being sued was on the board of the organization. After $29K in legal fees, BVNA was dismissed from the suit. Still, the insurance company paid out another $75K in legal fees for the former board member. In May, BVNA learned that they were being dropped by their insurance carrier, and efforts to find a new one resulted in either rejection or untenable premiums and deductibles. Last night, the board of BVNA scheduled a meeting with the intention of voting the organization out of existence.
But that’s not what happened! According to an email from BVNA, they finally found a carrier last week that specializes in “hard to place risk,” and they will be moving forward with getting D&O insurance from that company. The email doesn’t indicate the price of the coverage, but it does suggest a higher price and that the organization will be pursuing additional fundraising activities to defray those costs.
Not only is this great news for Bella Vista, it’s great news for community groups all over the city. As BVNA has now identified an insurance carrier that’s willing to step forward and offer coverage for an RCO that’s been sued once or twice, other groups could be spared the fate of Old City Civic. We offer congratulations to BVNA for finding a way to survive this terrible situation, and a big thank you in advance from other RCOs that may find themselves in the same boat somewhere down the line.