Condominium Association Challenge of Handling Hurricane Michael Insurance Claims
After a meeting with the Board President of a Panama City Condominium Association, I had the chance to follow-up with some recommendations for dealing with their insurance company adjuster and contractors that I would like to share with others who may benefit from the same information.
First, keep in mind that the Board has a fiduciary responsibility to the both the Association members and to itself. The Board will need to assign someone to manage all aspects of the claim to the very finish. Whether that person be an individual or a committee, ideally that person(s) would need to be qualified and competent to get the association through this burdensome process. By no means will this be an easy process and given the magnitude of this catastrophic Hurricane. These claims can get complicated and many will not be amicably resolved their claims to their satisfaction.
Second, it is critical that the Board continue to be extremely active in what will prove to be a very challenging recovery process for many months to come. When communal living communities are damaged, it seems every owner has their own opinion about the repairs, the cost, and of course they all want their units put back the way they were in as little time as possible.
The challenge here is that condominium associations are generally divided by the master association’s property and the unit owner’s property with the law setting out who is responsible for what the insurance company’s pay to repair the two properties. There have been close to 20 re-writes of the Florida Statue 718.111 (11) Insurance over the years and the interpretation of the statute is not simple. We constantly run into controversy as insurance companies and their adjusters will apply their own interpretation in a manner that will benefit them; versus what benefits the Association; versus what benefits the unit-owner who is supposed to carry their own HO-6 policy.
The process will be further complicated if there are multiple perils that caused damage to the Association’s building(s), such as flood damage & wind damage or a combination of both. Long story short, all the damages have to be separated out and unfortunately the insurance Policy contract requires the insured policyholder to do this. If there are damages caused by flood & damages caused by wind, the claim adjusters hired to represent the insurance companies they work for are going to be pointing their fingers at each other and the Association will be caught in the middle.
Association Boards turn to public adjusters to apply our knowledge of the various policy elements to the claims process. Essentially, we get hired by Association's to protect their best interests and that of the Board of Directors to ensure they are making competent decisions while keeping them in compliance with the Terms & Provisions outlined in their insurance policy contracts. Communication is very critical in this type of situation and we make it a habit to meet with the Board or their sub-committee on a regular basis. Having a professional working on the Association’s side is most beneficial as it removes the burden and risk from the Board having self-educate (about the Policy provisions, coverages, limitations, deductible amounts, etc.) and make potential claim mistakes. Knowing how to present the claims properly in accordance with the policy contract helps to effectively negotiate what is rightfully owed, so the monies are there to rebuild. I have seen condo claims go so bad that each unit owner was assessed $100K to cover the cost of repairs.
For those Associations who have already started the claims process, below are questions that an Association can ask to at least see where they stand:
Questions for the Contractor:
1. Please update the Board on the current status of the mitigation process? Are things running smooth? What are the challenges?
2. How much longer do you think you will need to fully complete the mitigation?
3. After you are complete, will you guarantee the Board of Directors that our buildings will be completely dry & free of any mold issues?
4. Is the contractor willing to provide the Board with copies of its Final Moisture Map Reports, Drying Logs, Time Sheets & Names of all workers as well as a detailed list of all the equipment used to mitigate our buildings so we can have this information and documentation for our files? When can we expect you to provide us all this documentation?
5. Can you explain what will happen if our insurance company does not agree to pay for your entire emergency wervice bill? Specifically, will the contractor amend and/or reduce the final invoice for the amount that the insurance company will ultimately be agreeable to pay?
6. Approximately what is the current amount of your mitigation invoice for the emergency services performed to date?
7. Have the contractor explain their alternative dispute resolution process so the BOD understands what that process is if for some reason something changes in the future? Does the BOD need to worry about the contractor placing a lien on our property should the Association not have enough money to pay the final invoice?
8. Is the contractor interested in helping complete the reconstruction of the building(s) should the Board decide they want a bid?
Questions for the Insurance Company Adjuster:
1. Do you or the insurance company have any issues with the mitigation / emergency wervice work completed to date? Will you or the insurance company send us a letter, (in writing) confirming they will pay the entire mitigation invoice, so the Board can have some peace of mind?
2. If the insurance company or you are not agreeable to sending us a written letter confirming full payment, can you explain what steps are needed should a dispute arise?
3. When can we expect to receive your preliminary repair estimates to rebuild our buildings to their pre-loss condition? We need to see and review the repair estimates so we can intelligently start having discussions with contractors.
4. Do you have a rough “guesstimate” of what you think our claim will settle at to properly fix all the damages to our buildings?
5. How long do you think it will take to completely resolve our claim with the insurance company?
6. We understand that everything is still a work in progress, but we would greatly appreciate it if the insurance company would be agreeable to sending us another Advance Payment so we can start allocating our resources, ordering of building supplies and materials that will be needed for the reconstruction. (Hopefully the insurance company paid the BOD an Advance Payment already!)
7. Obviously we need to start the process of replacing our damaged roofs, but can you provide an overall time frame that the Board can expect to receive its final payment?
Bottom line, please make sure the Board takes all the appropriate steps and makes informed decisions regarding the claim. It will mean the difference between an inadequate claim settlement or a fair claim recovery. If you have questions regarding any property insurance related issue caused by Hurricane Michael, call our public adjuster office in Panama City, 850-888-8052 or contact a public adjuster to submit a question to one of our insurance claim experts.