Condo Meltdown: CODE RED

[MIGA1626]

I insure an 8 story condo association and there was a water leak in the Condo that damaged some other condos. Now 3 different individual condo unit owner's insurance is now hounding the President of the HOA to file a claim on the master policy. Shouldn't this be the responsibility of each unit owners insurance? The law as I understand it states the master policy is only responsible for condo areas. THANKSSSSSS!!!!!!!!!!!!!!

 

[fed up]

Where did the leak occur and was it in an area the the individual condo owner control?

 

[Al3x Lee]

It's probably just best to make the claim and let the insurance carriers sort it out amongst themselves. Several factors come into play here, such as the HOA bylaws/CC&Rs. The bylaws normally spell out where the responsibility lies for insuring the units, structure and common areas.

Most of the time the HOAs don't even know what is written into their bylaws. I've seen HOAs where the bylaws state the HOA is responsible for the entire structure, including the units themselves & improvements/betterments, yet their insurance only covers the shell of the structure.

It is outside of our realm as insurance agents to make sure the bylaws match the coverage. This ventures more into the advice that the HOA should seek from its legal council.

The cause and source of the leak will be another factor, as what damage the leak caused.

I hate HOAs lol

 

[marindependent]

Most of the time the HOAs don't even know what is written into their bylaws.

Exactly

I've seen HOAs where the bylaws state the HOA is responsible for the entire structure, including the units themselves & improvements/betterments, yet their insurance only covers the shell of the structure.

Me too! I thought I was the only one [just joking]?

make the claim and let the insurance carriers sort it out amongst themselves.

100% Agree

Get out of the middle of this - You do not want to be seen as encouraging or discouraging a claim in this situation.

 

[myfakename]

Most of the time the HOAs don't even know what is written into their bylaws. I've seen HOAs where the bylaws state the HOA is responsible for the entire structure, including the units themselves & improvements/betterments, yet their insurance only covers the shell of the structure.

I hate HOAs lol

I have an active claim from a water leak. POA thought it was minor on their end.

Ended up bylaws were poorly written and POA (and us) is now responsible for sheetrock and flooring. Turned a 5k or less claim into a 45k claim.

 

[marindependent]

I hate HOAs lol

I do too. I really dislike even writing HO6 unitowner policies - because often the HOA documents are so unaligned with the Current Insurance policies that it leads to a fight. And none of it - is worth an agents time, unless you have the Master HOA policy.

 

[Al3x Lee]

I do too. I really dislike even writing HO6 unitowner policies - because often the HOA documents are so unaligned with the Current Insurance policies that it leads to a fight. And none of it - is worth an agents time, unless you have the Master HOA policy.

Man even the master policy isn't usually worth the agent's time
The unit owners' lenders are fascinating people. It seems like they put them through a 1 hour insurance bootcamp and tell them that the real insurance agents are all idiots. I can't fathom any other reason for them making the types of demands they do.

 

[adjusterjack]

I had the same issues adjusting condo claims. My claims territory included Florida, so I got plenty of them.

Every set of CC&Rs is 50 to 100 pages and they all have their own little nuances. Makes for a lot of unhappy unit owners and HOA boards that don't want a claim on their insurance record.

Especially older condo owners that paid cash for their condos years ago when they were cheap, and never bought insurance.

They also tend not to understand that the master policy often has a deductible of $5000 and up so they wouldn't get anything, or much, anyway.

Shouldn't this be the responsibility of each unit owners insurance? The law as I understand it states the master policy is only responsible for condo areas.

No, the "law" doesn't "state" that at all. It's what the contract (CC&Rs) between the unit owner and the HOA states that counts. The CC&Rs define "unit" and "common elements." Those definitions reveal who is responsible for what. The HO-6 covers the "unit", and the HOA master policy covers the "common elements." There is a fine line dividing the two. Water damage claims often involve both.

Now 3 different individual condo unit owner's insurance is now hounding the President of the HOA to file a claim on the master policy.

Tell the Pres to file the claim and let the insurance companies duke it out. The adjusters have (or should have) the ability and the experience to analyze the CC&Rs. You stay out of the middle.

Adding more fuel t the fire, there may also be a liability issue if one of the unit owners was negligent in causing the leak. Even worse when it's a tenant that caused the leak.

 

[Al3x Lee]

Tell the Pres to file the claim and let the insurance companies duke it out. The adjusters have (or should have) the ability and the experience to analyze the CC&Rs. You stay out of the middle.

I'm gonna take a wild guess that you hate HOAs just as much as I do

 

[marindependent]

I'm gonna take a wild guess that you hate HOAs just as much as I do

LOL!

You know the most hilarious thing is how many unit owners tell you "This is how the previous owner or insurer did it" as it that was some sort of golden passport to the problem.