Condominium and Homeowner Association claims present a challenge unlike any other loss adjusting process. From our firm's 27 years of experience in representing this group of policyholders, the issues that compound the problems beyond the actual loss and damages calculations are the ever changing laws the insurance contract must conform to, as well as the communal living arrangement where unit owners are living side-by-side and in some cases connected units with others living on top of each other. When these communities are damaged, it seems every owner has their own opinion about the repairs, the cost, and of course they all want their unit put back the way it was in as little time as possible. It’s at this time, following a major property loss, that the owners are reminded or are directed to the governing documents which generally set out the procedures of who will work on the process and how it is supposed to work in order to restore the insured property.
Condominium Associations, depending on the state where they are located, may have different ownership rights, property insurance issues, and requirements than a Homeowners Association. As an example, in Florida a condo association is generally divided into the master association’s property and the unit owner’s property with the law setting out who is responsible for the insurance and repairs of the two properties. Unfortunately, there has been close to some 20 rewrites of the Florida statutes that over the years have attempted to set out who has the responsibility to insure the property and make repairs to the master property versus the unit owners. Given all these changes, the interpretation of the statutes are not simple and we constantly run into controversy as insurance companies and their adjusters still apply their own interpretation in a manner that will benefit them versus the policyholders.
There are also many properties that look like a condominium with attached units but in fact they have been set up as homeowner associations. The statute for this type of community will be different than a condominium association. Many of these attached homeowner communities (some are often townhomes) are titled with the unit owner owning it in fee simple ownership. They also own the complete unit, which requires them to insure them with a standard homeowners policy know as an HO 3 policy. In a condo the condo unit owner would insure their property as required by law with an HO 6 policy.
When a loss occurs to multiple buildings/units in a homeowners association, it is very difficult to not only adjust these losses but also for the community owners to agree on a repair plan as each unit owner has their own insurance and probably an opinion on the necessary repair protocol. We sometimes find the association documents in conflict as there are often questions regarding who has the right or obligation to make repairs. The big conflict often occurs after an insurance covered loss, which is different than normal repairs and maintenance. If you live in a homeowners association with fee simple ownership and the units are attached, we suggest you review the insurance and repair plan with your legal counsel and understand the issues before a loss occurs in your association.
Pre-loss planning is critical in these communities. A plan should be put in place so a person or committee can step in and deal with the many issues that follow damage to multiple units. In addition to a well planned disaster recovery plan, these associations should have a file available that shows the pre-loss condition of the property through inspection and condition survey reports. It is also important that condo homeowner’s records, board minutes and other records frequently requested by the adjuster be available.
Remember, you will have to assign a manager of the loss whether it is a board member, a committee, and ideally a qualified and competent public adjusting firm to get your association through all the myriad of issues that follow in the loss adjusting process and repair process.
For over 27 years, condominium associations and unit owners have turned to or referred their colleagues to Tutwiler & Associates. As experienced public adjusters, we understand the claims process and have all the resources to help you recover your claim. Our knowledge of the insurance policy, claims process and field experience have yielded us a longstanding positive reputation in the industry.
We pride ourselves on obtaining the maximum claims settlement under your policy provisions so you can be paid to recover as quickly as possible.
Continuing Education Courses for Property Managers and Community Association Managers
Tutwiler & Associates is offering two, 2 hour, 2 credit courses. Navigating the Insurance Claim Minefield or Disaster Planning and the Reality of Insurance Claim Outcomes. Call 800-321-4488 to schedule a class for your group.