As a manager for a homeowners or condo owners association, it is critical that you understand the terminology and specifics of the technical insurance plans meant to protect the building and the association.
Insurance companies find it easier – and less expensive – to avoid payment than it is to issue a check for damages. Insurance firms are experts at bending policy language to their advantage. While it may appear to be unjust, it is rather common. Understanding the fine language on your insurance policy can help you avoid delays or denials in your financial recovery.
When a tragedy happens, many community organizations may not be aware of the full extent of the financial effects. When structural damage happens, HOAs, like most others, rely on their insurance policies to provide the coverage needed to rebuild. Unfortunately, the rehabilitation process is not simple.
The amount of destruction left behind by Hurricanes Michael and Irma around the state caused a serious dilemma for HOA communities and condo complexes, as many are still trying to recoup and collect payouts from their insurance providers. With almost 20,000 outstanding Hurricane Michael insurance claims in Florida, it is critical that your HOA community has enough coverage and is prepared for unexpected disasters.
Review the HOA Insurance Policy and Its Coverage Often
Every homeowners’ association and condo board should assess their existing insurance policy and total coverage on an annual basis to ensure it meets the demands of their community.
This involves understanding the applicable deductibles. There are frequently different and higher policy deductibles for storms, hurricanes, and floods, and it is critical to understand what is covered.
HOA property policies should also address frequent risks that influence the construction of the building or community that they manage. When examining the policy, ensure that it provides coverage for:
- Building structural damage, including windows and sliding glass doors
- Roof deterioration, including gutters and skylights
- Common-area damage includes parking covers or garages, railings, lobbies, elevators, swimming pools, tennis/basketball courts, landscaping, and lighting structures.
- General Liability
Check the HOA Bylaws and the Policies of the Condo/Unit Owners.
When the HOA files a claim, it is vital to investigate and understand the bylaws to determine if the association or the unit owner is responsible for covering the damages.
HOAs give governing principles in the form of bylaws. The rules should indicate how frequently meetings are held, how many people are on the board, and what distinguishes the shared features or sections of the building from what is considered to be the individual unit owners’ property.
Furthermore, the HOA provides hazard and liability insurance as part of the monthly condo dues. The policy addresses common components and shared features such as the roof, the outside structure of the building, and services such as the pool and gym.
Individual unit owners, on the other hand, have their own insurance, known as a HO6 insurance policy. This policy protects condo/unit owners’ personal goods, personal property, and anything kept within the walls of their own flat (s). This coverage also covers liability claims and aids in the payment of living expenses if the unit becomes uninhabitable.
What Types of HOA Insurance Claims Does the Association Typically File?
- Fire and smoke damage
- Water damage
- Roof damage
- Storm and hurricane damage
- Broken water lines
- Broken water heaters
- Broken sprinklers
- Damage to common areas including elevators, lobbies, swimming pools, and parking covers
Why Would the Insurance Company Dispute the HOA’s Claim?
When homeowners’, condominium, and townhouse associations file property damage claims, it is frequently due to structural damage to many condos, units, or common areas. When the damages are significant, the difficulty of accounting for, proving, and compensating all insured losses increases.
This further complicates the recovery process, which insurance firms frequently exploit. They usually claim that there is insufficient proof of damages or that the policyholder did not notify their insurer in a timely manner. To save money, the insurance company would regularly simply deny a legitimate claim, often without providing a compelling rationale or explanation.