Policyholder Question: What should the Condo Board do?
Q. I serve on a COA Board and we recently had a fire. Our property manager is telling us the contractor will handle everything, while some of us want to talk to a public adjuster. What is your perspective?
A. By law in Florida, your contractor cannot act as the adjuster. He cannot negotiate on the behalf of the condo association. Thus, the condo must have some board member or members appointed to step up and take responsibility for this function. Do they have the proper experience understanding coverage issues and negotiating a claim? Further the board has a fiduciary duty to do the right thing for the condo members. Board members must have Errors and Omissions coverage and check if this policy has enough coverage for the board to handle an insurance claim in case the association members don’t feel the claim was handled properly. For the above 2 reasons, many choose to have their attorney or a public adjuster manage the claim.
If they are relying on the contractor, it is absolutely necessary that company has a construction bond with limits in the event they screw up. Then the bonding company would comes in and hire another construction company to finish the job including covering for any shoddy work that may have been performed before the first contractor folded providing the bond pays for all the work to be completed.
The condo also needs to retain its own engineer to oversee that the repair work is done properly and to code. If they fail to hire an engineer and the work is not done correctly, the insurance company will not pay if a second loss occurs at some point. I have seen roofs put on backwards, upside down, etc. and when they fail the condo association will most likely have to pay out of pocket.
Finally, I still have a letter from one of my big condo clients in Miami after Hurricane Andrew where the board wrote a letter to the Dept. of Insurance and laid out their problems some months after the storm, asking the State what they would recommend. The state answered they should hire a public adjuster.
- If there is an insurance claim, who is going to be the point person(s) from the Board and do they have the proper experience understanding coverage issues and negotiating a claim?
- Does the board have the proper E&O coverage if the members think they messed up the claim?
- For the above 2 reasons, many choose to have their attorney or a public adjuster manage the claim. By law, a contractor cannot adjust the claim.
- They need to make sure their contractor is bonded.
- They probably should hire an engineer to oversee the repair is done to code.
- How and what are they going to communicate with the members to keep the rumor mill at a minimum?
Things are always more complicated than they seem. Good luck