What to know when your homeowners association files an insurance claim

Article Courtesy of The South Florida Business Journal

By The Morgan Law Group, P.A.

Published January 11, 2020


If your home or condominium is part of a homeowners or condo owners association, the insurance coverage that is designed to protect your building or community is complex – in both the language and in the details.

The small print that exists within the insurance coverage can often lead to delays or denials in financial recovery when a claim is submitted by the HOA, simply because it’s easier — and cheaper — for the insurance company to avoid payment than it is to write a check for the damages. Insurance companies are masters at manipulating policy language to benefit their bottom line. And while it’s unfair, it is common.

What types of HOA insurance claims can the HOA and condo associations file?

  • Storm and hurricane damage.

  • Fire and smoke damage.

  • Water damage.

  • Broken water lines.

  • Broken water heaters.

  • Broken sprinklers.

  • Roof damage.

  • Damage to common areas including elevators, lobbies, swimming pools, and parking covers.

Make sure you review the HOA bylaws and the individual unit owners’ policy to understand who is responsible for the claim.

When your HOA submits a claim, it is important to review and understand the bylaws to determine who is responsible and what coverage is included.

HOAs provide bylaws which are governing guides. The bylaws should cover things like how often you have meetings, how many people are on the board, how often membership meetings are required, and what defines common elements of the building, versus individual unit owner’s property.

Additionally, the HOA provides hazard and liability insurance, as part of the unit owner’s monthly condo dues. The policy covers common elements and shared features such as the roof, exterior structure and amenities, like the pool and gym.

On the other hand, individual unit owners have their own condo insurance, also known as an HO6 insurance policy. This provides condo unit owners coverage for their own properties, belongings, and everything within the walls of their individual unit. It also protects against liability claims and helps cover the costs if the unit is uninhabitable.

Why would the insurance company dispute the HOA’s claim?

When homeowner’s associations, condominium associations, and townhome associations file property damage claims, it is typically because structural damage to multiple condos, units, roofs or common areas has occurred.

Disputes often arise between HOAs and the insurance company after the insurer denies a valid claim, many times without a legitimate reason or explanation.

Since the insured losses in these cases can also affect the structural integrity of the building in some cases, the claims process may be complicated. And when the damages are extensive, so is the difficultly in accounting for, substantiating, and covering all insured losses.

Insurance companies use the complexity of these insurance claims against the policyholder, which can drastically affect the pace and outcome of a claim settlement.