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Policyholder Question – Recovery and Reconstruction from Hurricane Matthew Demolition

Policyholder Question – Recovery and Reconstruction from Hurricane Matthew Demolition

The following is an insurance claim question we answered for a policyholder through the United Policyholders Ask an Expert Forum.

Q. I live in coastal SC. January 8, 2017 is the three-month anniversary of Hurricane Matthew which caused extensive wind and flood damage. On October 10, 2016, the community association hired restoration company was on site demolishing and removing drywall, appliances, insulation, furniture from 32 townhomes and condos. Approximately ten 8x12 foot piles of damaged property were hauled to a landfill. WMC, LLC changed managers three times in these three months. We have received 4 or 5 letters requesting patience. We have not received a construction start date, information on what buildings will be repaired, order of repair, the construction companies, cost, or timeframe. I was advised to find an aggressive SC flood insurance and homeowners association attorney. We are running out of "loss of use" paying for a rental home. Please advise.

A. Thank you for your question. I am not sure if you are an owner in a condominium association or if the units where you live are a homeowners association where the units are titled as fee simple ownership. How the units are owned (titled) could make a big difference in the insurance adjustment process. For the purpose of this answer I will assume you are a condominium association. So let's get started.  First and foremost someone in the association should take charge of the claim process to find out what policies are in force, such as wind coverage and/or flood coverage.  A line of communication to all the owners needs to be set up so everyone knows what is going on, as well as the establishment of a global recovery plan. I have seen dedicated internet sites set up so thoughts, questions, and concerns of neighbors can be shared and addressed. Communication is a vital element in any disaster recovery effort.

As to the claim process, if both perils (wind and flood) damaged the property, then the adjustment process will likely become problematic in that agreements will need to be reached as to what peril caused what damage. If flood is involved and there is flood coverage, the good news is that flood will pay for all building damages without regard to unit owners' property versus the master association's property as it relates to the building damage. Building damage caused by flood that is covered property will be paid for by flood. Not knowing the site conditions, you may have issues of what came first, the wind or the flood.  But remember, with the National Flood Insurance Program, the community will still have policy issues to deal with such as exclusions, coinsurance and a whole host of other policy terms and conditions FEMA has imposed in the NFIP program.

Having handled many communal claims involving condos as well as homeowner associations where two perils caused damaged with different policy terms and conditions, your community will definitely need professional help in sorting out all the issues.

Knowing the myriad of issues with your type of loss, I think the first order of business for your attorney would be to seek out several licensed and experienced public adjusting firms that would acts as your representative in what will likely be a complex and difficult recovery process just on the claim side. Have them give you a proposal on what they would do given your facts as well as a fee proposal.

I do not recommend you proceed on with a contractor at this point beyond basic emergency services until you have detailed scope of losses that are prepared based on the damages and the policy terms and conditions. Any contracts proposed by a contractor should be carefully reviewed by the association's general legal counsel.  In my view, it is always best to reach a settlement with the insurance carrier(s) first and then ask several contractors to bid on the work as outlined in a detailed scope of loss. Do not share your insurance settlement amount with them but instead request competitive bids.

Having professional help in this type of claim environment is well worth the fee that an honest, reputable experienced public adjuster may charge.     

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