Insurance Claims by Condo and Homeowners’ Associations for wind and hail storms
When condominium association property is damaged by a wind or hail storm the board of directors and management company are responsible for filing a claim with the insurance company. Until they are actually sued board members are not aware that they can be held liable by their association members for dropping ball on filing a claim. Usually, the property manager will have the insurance company’s adjuster come out to inspect the damage caused by the storm. Oftentimes the adjuster will says something to the effect that the claim is not worth filing because “the deductible is higher than the amount of damages.” Many times we have seen this to be far from true, especially damage resulting from a tornado or hurricane. Structural damage caused by heavy winds can remain “unseen” for many years, and not discovered until after unit owners start complaining about water leaking through tiny cracks in their ceilings or windows.
Who are the Policyholders and what is the full universe of Policies Available?
After the storm, the association must inspect the property and figure out the full extent of the damage. For instance, is the damage only contained within “association property” or does it extend into individual condo units? The location and extent of damage will determine the coverage, insureds, and the applicable policies of insurance. In most states that have enacted condominium or community association laws, associations are required to insure every common building and structure to some extent, including the portions deeded as individual unit owner property when the individual units are separated by horizontal boundaries.
After figuring out the full extent of the damage, the association next has to determine the full extent of possible insurance policies which could provide coverage for the damage. The specific terms of one policy may fill coverage gaps in the other; or provide insurance coverage in order to meet the other policy’s deductible. It is prudent to prepare a chart defining the full universe of policies and damage as well as to outline types of coverages, policy exclusions and limitations under each of the insurance policies.
Find out what the Unit Owners are doing with respect to damage to their Units.
The association or property manager should painstakingly document all the damage to the property, including individual units, and keep track of whether unit owners are also making claims. Unit owners may be collecting from their insurance companies for their individual claims which could preclude the association from also making claims for those units.
Use your insurance recovery to fix and repair the actual damage:
We have obtained large recoveries after difficult trials, or from settlements after long and tedious litigation only to see the association then spend the dollars recovered from the insurance company in upgrading to their pool and lobby — neither of which were damaged by the storm! That can’t be done. If that condo ever suffers damages from another major storm, they won’t be able to recover against the insurance company because they never fixed the damage from the earlier storm for which they obtained an insurance payout.
Settlement and Recovery
Settlement and recovery under an association insurance policy will have to involve the association board members and directors. The association and not the individual unit owners, most likely are the only ones with the authority to accept or reject proposed repairs and offers to settle the claim. We have worked with many different boards in various states over the years and are aware that not everyone on a board will see eye to eye with one another. In our experience we have been able to help resolve differences of opinions within a board so that each of the board members are properly educated on the claim process and what must be done in order to collect from an obstinate insurance company. If your insurance claim has been denied, delayed or underpaid contact Anthony Bruozas & Associates, PC, for a free case evaluation.