Question concerning insurance/liability

The most recent podcast, "The Click 1-3", has rekindled a concern I've had with intentional community models.  I've made an observation of IC's that I've paid attention to over my own travels that seems to mesh well with Paul's experiences; that in addition to needing a community with a shared sense of values/ethics, everyone must also more or less be able to adhere to Maybury's two laws of Civilizations...

1) Do all that you have agreed to do...
2) and don't encroach on another's person or their property.

People who can succeed within any community need to be able to abide by these two rules, intuitively; but also need to be able to understand, in detail and in total, what they have agreed to do and what "property" means within the community.  Also, in order for the community to survive, the community needs to have some means of suppressing or removing those who can't abide by the Two Laws.  In short, all communities need an authority; in the case of Wheaton Labs, that's Paul in his role as "benevolent dictator".

But, what I don't understand is how to deal with risk & liability within such a community. In a traditional household, that path is well understood; all liability is borne by the parents who (functionally) own all the property, and also bear all the risk or buy insurance to deal with it.  But in an IC, that model doesn't quite work.  If every 'owner' is buying the insurance then two inefficenies arise; first is that too much insurance coverage is inevitable, and that separate polices by different members of the IC can be adversarial in the event of a claim against each other, which cannot be resolved within the community itself.  

For a bit of simplicity, let's just look at automobile & driver's liability insurance, which is required by law in most states.  If long-term residents of Wheaton Labs rarely drive anywhere, but each owner of a private vehicle must pay for their own car insurance (legally unavoidable), then there's quite a bit of vehicle redundancy going on, and a lot of redundant insurance as well, within a community that's particularly short of one particular resource; income.  But if there's a shared vehicle that is used by anyone with a license who lives on Wheaton Labs, whoever legally owns that vehicle is subsidizing the rest of the community via their own insurance policy; for which there's a decent chance will be denied in the event of an accident, once the insurance company learns that the driver of the car during the wreck was neither their own client, nor a legal relation to their client.  Anyone here who has lived long enough to have had interactions with insurance companies will start to understand my concern here, as insurance companies are known for filing lawsuits, sometimes against their own clients when the details of the policy have been 'violated' as they may see it.

Worse than the car insurance example, however, are liability & risk issues with other parts of life. Traditional  health coverage, for example; or property insurance.  Wheaton Labs probably doesn't need property damage insurance, per se; but certainly some kind of general health coverage, as accidental injuries occur on traditional farms all the time.  Who pays the bill if a Boot falls down the greenhouse steps and breaks an ankle?  If the default answer is "Paul" then that's not at all fair, nor an acceptable form of risk management.

Interesting question, and the answer doubtless depends on where you are located. My answer, as a resident of Ontario, Canada (and neither lawyer nor insurance agent, though my profession is risk management):

The framework depends on who is the ultimate entity owning assets, worried about liability, and seeking insurance. If an individual owns a car, up here their insurance does apply if someone else with their permission uses it as a one-off. If that someone, however, borrows it regularly, they need to be listed on the policy as an occasional driver. The premium then reflects this. And in both cases, if the borrower has an accident, the "insurance rating" of the owner is negatively impacted. This does not apply to "commercial use", where a fee is charged for the "borrowing". Or even for driving-for-hire, where the (insured) owner/driver transports others for money.

So an IC where an individual has no objection to their personal vehicle being borrowed, once in a while, and no money changes hands, should face no issue (though their insurance rating may get trashed). But if people borrow the car frequently, especially regularly, or money changes hands on a regular basis to "compensate" the owner (whether it's per year/month, per use, per km), then you may be offside. And while I know situations where people have put a single neighbour on as occasional driver on the car insurance policy, there's probably a maximum number above which the insurance company will balk.

The more the IC is moving into this level of complexity, the more I suspect it will be helpful for the IC itself to become a legal entity that owns the assets and insures its risks. I am not actually familiar with this in the IC context, but I do know instances where

a) groups of cottagers have (actually have been forced to have) a road association, legally constructed (in Ontario) as a "common elements condominium corporation" that owns land (the road) and vehicles/equipment (e.g. a grader/tractor and snowplow to maintain it). The cottagers own shares in the condominium corporation, which itself obtains insurance under a commercial policy. The cost of that insurance, and other costs, are split amongst the owners.

b) extended families own a farm corporation, and again insurance owned by that corporation protects it.

I'd expect this type of framework would also work for your "greenhouse accident" example, though (apart from US issues about health costs/insurance we don't worry about up here) the legal ramifications are likely different based on whether the context is more like a visitor to the property vs an employee injured in the course of their duties.

[All this is my somewhat-informed speculation. Liability is one of those areas where legal advice *in one's own jurisdiction* makes a ton of sense. In particular, if this is relevant to someone reading this on a direct level rather than idle musing about ICs, then seek qualified advice and don't rely on my or other random wisdom on the internet.]

Would insurance not be covered in the same manner as land taxes? I.e everyone chips in towards the bill? and the charitable entity that owns the land/runs everything is the thing named. Cars can have multiple named drivers or even be insured as hire/business cars. (not a problem here, here you insure the car not the driver, anyone with a valid driving license can drive my car and is insured)
Farm insurance will covers interns/workers so that would also just be added to the pool of things that needed to be paid for. For example here if you came and fell down the steps and broke your ankle here my insurance covers me against damages, whether or not you were just visiting or if you were actually helping, health insurance is again not a thing here.

So in my legal setting I would set up a charity, then depending on numbers have pool cars insured as such. have general farm insurance covering visitors and helpers (also food poisoning etc) everyone involved would need to pay into the fund that paid out for taxes, insurance repairs etc. We did this for the shared road (4 houses) that needed graveling/scraping etc.

I assume that an intentional community is structured similar to a homeowner's association in that each individual owns their land then the association has a board of directors.

This is just basic information based on my understanding and the state I live in.

The individual owners would have the kind of insurance that they choose to protect themselves.

The association would have insurance that protects the buildings that the association owns and a liability policy to protect people that get hurt in those buildings, that might get hurt on the land the association owns, and on the decision that are made by the association.  If the association hires employees then these workers would be covered under workers comp insurance bought by the association.

Pretty complicated for the average individual so questions would need to be asks of their insurance agent because laws vary from state to state and even in what country they live in.

Your final paragraph hits the issue pretty solidly. There is simply no way to know without having all the specifics.  Thinking out loud,I once lived in a county where if a person paid taxes on a piece of property for 3 years in a row, they were considered to be owners.  One doesn't have to think too much to see where this could go sideways in a hurry.  

If its intended to move past speculation, I would consult a lawyer in addition to an insurance agent.

The potential pitfall is that even under a corporate scheme most states require there be one "responsible" individual
Every corporation, or LLC. requires an executive officer whose decisions are binding to the enterprise in whole.

While his decisions can be challenged in court, and his position prejudiced, his decisions are binding on the people he represents up to, and including, the dissolution and dissemination of assets.
In addition he is under burden of liability for failure to perform, (I.E. pay the bills, ensure basic safety standards (real or political), and gross negligence).

As of a couple years ago, vehicle insurance here has gotten sticky about listing all operators on the insurance, so that they can charge more if the secondary operators have higher rates. The rates have also drastically increased for newer drivers, to the extent of running potentially several thousand dollars a year... meanwhile some highly experienced drivers saw reductions in the the $50/year range..

A real pain in a larger group..

It is legally required, and a government controlled monopoly, so a group cannot choose to carry the risk themselves, nor shop around...

Hi D,

In at least some parts of this country it is possible to self-insure. It varies from state to state.  One way to self-insure would be to carry an extremely high deductible  and to keep a cash reserve to cover it.  Admittedly,  it is probably beyond the resources of many people.

Skandi Rogers wrote:Would insurance not be covered in the same manner as land taxes? I.e everyone chips in towards the bill? and the charitable entity that owns the land/runs everything is the thing named.

Well, no; probably not.  First off, an IC modeled after Wheaton Labs wouldn't have a charity owning the land; Paul owns it and it's a dangerous thing to own property collectively in most US states, although I don't know how risky that is in Montana. (If a charity owns the property, and you live on the property, you're not legally entitled to continue to live there. You're a charity case. If there's a dispute that ends up in court, the entire charity could blow up. Legal entities don't have the same ownership rights to property as breathing humans.) As I understand it, Paul is the legal owner of Wheaton Labs real estate property; and Boots and other residents are 'in-kind' residents. (They don't pay any contracted rent, they just live there; legally speaking)  

But more importantly, insurance can be very complicated in the US. Doing it as a 'pitch in' thing then becomes an issue with those who can't afford (or are unwilling) to contribute.  And what if they don't even have a valid driver's license at all? Do they still have to contribute? That can get very hostile fast.  That was why I brought up Maybury's Two Laws first, such things have to be explicit.

Anne Miller wrote:I assume that an intentional community is structured similar to a homeowner's association in that each individual owns their land then the association has a board of directors.

This is just basic information based on my understanding and the state I live in.

The individual owners would have the kind of insurance that they choose to protect themselves.

The association would have insurance that protects the buildings that the association owns and a liability policy to protect people that get hurt in those buildings, that might get hurt on the land the association owns, and on the decision that are made by the association.  If the association hires employees then these workers would be covered under workers comp insurance bought by the association.

Pretty complicated for the average individual so questions would need to be asks of their insurance agent because laws vary from state to state and even in what country they live in.

Yes, that would be the default situation.  But as I pointed out in my OP, this results in two issues.  First, the group is paying far more for auto insurance than is necessary; which is just an inefficient use of a valuable community resource, income from outside the community. It's a practical impossibility to expect that those who are willing to commute outside of the community to support all of the income needs of the community as a whole.  Part of the point of such an IC is to function as an extended household, wherein most of the basic needs of the group are provided from within; but the nature of modern societies requires that there be some amount of income (or cash savings from prior employment, but that's just a retirement community) in order to pay for the taxes, insurance, propane, etc.  So such inefficiencies should be reduced if possible.

But on the longer term, even if the members of the IC can afford separate insurance policies; such an arrangement poses a threat to the long term existence of the community itself, should any two members have some kind of incident or dispute that invokes their insurance policies. Insurance companies are prone to fight on a legal battlefield, and that has a high chance of sweeping the community itself into a legal bind.

And car insurance was just my easy example. Health coverage or liability is far worse, at least in the US at present.

Creighton Samuels wrote:First, the group is paying far more for auto insurance than is necessary; which is just an inefficient use of a valuable community resource, income from outside the community. It's a practical impossibility to expect that those who are willing to commute outside of the community to support all of the income needs of the community as a whole.

Specifically, in my area if the community is above a certain size, it would be a lot more efficient for the community (as whatever legal entity) to own the vehicle and insure under a "commercial" policy, and then allocate the costs of this insurance as well as all other vehicle-related costs to those community members who use it (likely proportional to its use). The individuals using the vehicle would not then need their own personal coverage for use of that vehicle. The premiums for such a commercial policy will be higher than for one primary individual owning and insuring plus a small number of occasional drivers. This reasonably reflects that the more "diffuse" ownership is, the less care people tend to take (they'll bang around their employer's truck more than their own, for instance). But those commercial premiums will be much less than each individual insuring themselves, since it reflects the physical reality that there is only one (or a handful) of shared vehicles.

John F Dean wrote:Hi D,

In at least some parts of this country it is possible to self-insure. It varies from state to state.  One way to self-insure would be to carry an extremely high deductible  and to keep a cash reserve to cover it.  Admittedly,  it is probably beyond the resources of many people.

The mandatory insurance here, is to protect other people and their stuff.

It is optional to insure your own stuff, and there are a variety of options for this part of the car insurance. But, since it is optional, I self insure for this part; I drive older vehicles, I give no fucks about cosmetic issues, and I can afford another vehicle if I write one off.


I would estimate that in the 20 years I have been driving, the savings from this practice have been enough to buy a truck like the ones I drive, in the $6000 range...


I'd have to be really, really rich to take the risk of not having insurance to cover me against injuring someone, if it was an option... And, I would be very unhappy to be injured by someone, and discover they had neither insurance nor assets to cover my medical costs... But the idea of a very high deductible as a way to get part-way to this is an interesting idea, albeit not an option here.


The absence of universal health care in the US must really change the car insurance situation, vs places that have it...

Martin Pergler wrote:

Creighton Samuels wrote:First, the group is paying far more for auto insurance than is necessary; which is just an inefficient use of a valuable community resource, income from outside the community. It's a practical impossibility to expect that those who are willing to commute outside of the community to support all of the income needs of the community as a whole.

Specifically, in my area if the community is above a certain size, it would be a lot more efficient for the community (as whatever legal entity) to own the vehicle and insure under a "commercial" policy, and then allocate the costs of this insurance as well as all other vehicle-related costs to those community members who use it (likely proportional to its use). The individuals using the vehicle would not then need their own personal coverage for use of that vehicle. The premiums for such a commercial policy will be higher than for one primary individual owning and insuring plus a small number of occasional drivers. This reasonably reflects that the more "diffuse" ownership is, the less care people tend to take (they'll bang around their employer's truck more than their own, for instance). But those commercial premiums will be much less than each individual insuring themselves, since it reflects the physical reality that there is only one (or a handful) of shared vehicles.

Okay, but how many unrelated members does it take to hit this crossover point? And how do you allocate the burden of the shared vehicle?

And again, this is the easy problem to solve; not the hard one.  The hard one is still that of general health coverage or personal injury liability.

As for the individual residents, I imagine something along the lines of a health sharing charity like Medi-share would be effective if all members are willing to participate, but as of now, such groups in the US are required by law to have a religious association.  So I'm pretty sure that a permies IC wouldn't qualify for the exception.

The personal injury liability remains, however.

My thoughts...what sort of insurance would a campground have? They have short and longterm tenants, and there must be some sort of liability coverage (what I would think would be most critical) these sorts of facilities carry. Here we also have insurance that covers those who "rent" (tenants insurance) and the owner or landlord carries specific insurance. Even those who do Air B and B need special insurance as a normal house policy is not valid if they take "renters. Perhaps something like this would cover on site liability.  

There also might be a waiver type of option where those "staying" at the Lab would legally waive any right to sue or be compensated for injuries/issues that occurred while on the property. I would assume this would require a lawyer to draft such a document, but might be WELL worth the initial cos (kind of like when you, say, go paragliding or bungy jumping - you waive your right to compensation if injured while on the property or engaged in activity on the property.

As to vehicle insurance...here so long as someone has a valid license, occasional or "one off" use of a vehicle should not be an issue. Our insurance asks for a designated driver - so my policy has me and my husband is a secondary driver; on his he is the designated, I am the occasional. Perhaps this would be an option.

Being Canadian, I have no idea about health insurance - we are fortunate to have universal health care that covers everything except meds, and even that is covered once a certain threshold is met (an annual amount).

Lorinne Anderson wrote:

As to vehicle insurance...here so long as someone has a valid license, occasional or "one off" use of a vehicle should not be an issue. Our insurance asks for a designated driver - so my policy has me and my husband is a secondary driver; on his he is the designated, I am the occasional. Perhaps this would be an option.

Following the changes at ICBC, there is a cap of IIRC 12 uses per year of a non-listed driver if they live in a different household. If they live in the same household, they *must* be listed to drive a given vehicle even once.

The distinction might get 'interesting' with ICBC in the case of some structures of IC, where a single address and perhaps single legal dwelling are widely shared...

Lorinne Anderson wrote:My thoughts...what sort of insurance would a campground have?

Same problem.  The campground is a business with business liability insurance, while the renters have their own RV or auto insurance. It's the redundancy and potential for an adversarial interaction between insurance companies that I'm concerned about here.

Creighton Samuels wrote:How many unrelated members does it take to hit this crossover point? And how do you allocate the burden of the shared vehicle?

And again, this is the easy problem to solve; not the hard one.  The hard one is still that of general health coverage or personal injury liability.

As for the individual residents, I imagine something along the lines of a health sharing charity like Medi-share would be effective if all members are willing to participate, but as of now, such groups in the US are required by law to have a religious association.  So I'm pretty sure that a permies IC wouldn't qualify for the exception.

The personal injury liability remains, however.

I asked a friend retired from insurance overnight on the car insurance. He expects that in Ontario, the crossover is about 3-4 people, but depends on the risk profile of the individuals (taken into account for individual policies for them but much less so for a commercial policy where they are employee-drivers) and kms driven. Since (regular) employers reimburse kms driven by personal cars by km, that's good enough for me, so I would allocate shared vehicle burden by km driven. Possibly with a "buy-in" for fixed costs per person if there's a feeling the vehicle is more a "just in case" for lots of *possible* drivers than for the regular use of a handful of regular drivers, and so a large part of its function is to stand-by just in case.

For on-site liability, I would explore a CGL (commercial general liability) policy for the IC as an entity, making sure it extends to IC members and their guests as "employees" as well as "visitors" (club-style), taking the guidance of insurance agent and/or lawyer to make sure that coverage is rock-solid. I would complement with D&O (directors and officers) E&O (errors and omissions) insurance for the people formally directors of the IC legal entity. The cost of both is a legitimate expense of the entity as should be allocated just as other overhead.

No clue on the health coverage, since your (US) system is so different from mine (Canada).

Creighton Samuels wrote:Yes, that would be the default situation.  But as I pointed out in my OP, this results in two issues.  ...

And car insurance was just my easy example. Health coverage or liability is far worse, at least in the US at present.

I was responding to this part of your thread:

Creighton said "But, what I don't understand is how to deal with risk & liability within such a community.

I hadn't read all of your thread and didn't even know you had even asked about auto insurance.

Auto insurance is pretty complicated for the average individual so questions would need to be asks of their insurance agent because laws vary from state to state and even in what country they live in.

Hmmm, what about "family camps" where the single property has multiple dwellings/buildings where extended family come and go...it is not a rental, but used by a lot of different people, related and unrelated (as it would be "loaned" to friends or commonly folks bring friends (especially kids) when using their "allotted time" slot at the camp. Simillarily would be "hunting camps" or backwoods recreation camps...often those are owned by the state, though just as often by private groups.

I'm still thinking the legal waiver may be the way to go - or perhaps charging a nominal fee ($10 a month) that would constitute "rent" that would make the Lab the landlord. This might have other benefits, such as if one were in a situation where a resident became undesirable and required removal...

Just had another thought - how do co-op's work? That seems a more comparable operation than anything - those staying would become members of the co-op and when they leave "sell" their shares back to the Lab? Then the property and gods (vehicles etc) would be under a single umbrella of Co-Op property?

Just to put some numbers on this, liability insurance usually isn't that bad. I had a small wilderness guide service for a while where we took people, including kids, into some fairly gnarly terrain overnight. There were requirements on the guides in regards to our certification levels and we had to show our operating plans, which the national park service wanted anyway to grant a permit. But I think we were paying ~$1,100 a year. So yeah, it's money, but I can't imagine a simple liability policy for a farm being much more, provided you're following safe practices which you should be anyway. Accidents aren't what happen to other people, etc.

Health insurance, for those of us in the USA, is the real kicker. Maybe more than anything else I'd like to see a public health care option in the USA.