HOAs and Condos: Resolving Insurance Disputes For Boards and Residents

Community associations are frequently at odds with their insurance providers after experiencing a disaster. Damage sustained by a condominium complex can have far-ranging financial impacts for both community associations and individual unit owners. The insurance policies that community associations rely upon to repair structural and other damage are complex documents. The recovery process is made more challenging when unit owners have their own costly repairs to manage and their own insurance that may cover some of the damage.

It is critical for a community association to understand how to navigate complex insurance policies. If you are in a leadership position in your HOA/COA and need to file an insurance claim after your community has suffered damage, then you must have a plan for moving forward. Balancing the finances of a condo community with the need to maintain the common property is the twin goal of a condo association.

Pearson Legal, P.C. has the experience and knowledge necessary to protect condo associations and communities in a dispute with an insurance carrier.  When your insurer is not honoring its responsibilities after a disaster, our team of legal professionals can step in to assist. Contact our office today for a consultation and to learn more.

The importance of insurance policies for homeowners’ associations and condo owners

Does your homeowners’ association have adequate insurance coverage when a disaster happens? Ideally, you would ask this question prior to buying a condo in that community. Regardless of whether you performed this research earlier, it is now essential to determine whether you are protected when damage occurs to your unit or to common areas in the community. Many times, the community association’s governing documents contain the answers to these sorts of questions.

Most community associations must maintain a minimum level of insurance to protect residents against the effects of disasters. The type of policy held, the coverage details, and the circumstances by which the policy was agreed to should all be available to unit owners upon request.

What can you do if the association documents do not provide clarity regarding what is covered by the policy? From there, you should contact your homeowners’ association and request a certificate of insurance. The insurance carrier, the limits of coverage, and the effective dates of the policy are all basic information that you should understand. Once you have a grasp of this information, you can make decisions about whether to purchase supplemental policies to protect your individual unit.

How are common areas of a condo complex covered by insurance policies?

A master insurance policy is often seen as a way to cover common areas for condo owners and their homeowners’ association. Examples of common spaces that are shared by all condo owners include the pool/spa, patio area, gardens, lobbies, roofs, exterior walls and hallways.  Part of your homeowners’ association dues are paid to maintain and improve these areas, as needed. The master insurance policy seeks to provide coverage for the common areas as well as peace of mind for owners of condos.

Most states require homeowners’ associations to maintain a master policy related to common areas to protect condo homeowners. The key difference between a master policy and a homeowner’s insurance policy is what each policy covers. A homeowner’s policy focuses its protections on an individual unit and the contents within. On the other hand, a master policy covers common areas that are utilized by the residents outside of their condo unit. These common areas of condo developments frequently incur damage as a result of disasters.

What types of damages are relevant to a homeowner’s association?

Whether a homeowner’s or master policy covers the type of damages suffered in the disaster determines the potential financial fallout for the HOA/COA and for the unit owners.  The following is a list of damages commonly encountered by condo owners as a result of disasters, natural and otherwise.

Water damage is a problem encountered by many condo owners and their community associations. Extreme weather, flooding, burst pipes, and leaks all increase the likelihood of water damage to a condo. Water lines deteriorate over time and repairing them can be costly.  This is where the insurance company which issued a master policy may try to avoid its responsibility and instead insist that the unit owner repair any damages.

Wind and hail are common causes of damages to roofs, walls, and other common areas.  A community association’s governing documents are usually pretty clear as to who is responsible for maintaining roofs and walls, but an HOA/COA’s insurer may still attempt to avoid responsibility for a covered loss.

Likewise, Fire damage has far-reaching effects for condo developments. Fires typically occur without any warning, break out quickly, and then spread even faster. What’s more, even when a fire is put out quickly, the damage may be widespread.  For example, smoke and soot spread to the nooks and crannies of a condo community even if visible fire damage is minimal. Being on the same page with your homeowner’s association as far as remediation is concerned matters a great deal.

Speak with an advocate who fights for their clients: Pearson Legal, P.C.

Contact Pearson Legal, P.C. today for a consultation to learn more. When your insurance carrier is failing to live up to its responsibilities, our team of legal professionals steps in. Before it’s too late, discuss your case and develop a plan to protect the home you’ve worked hard for.