CLAIMS COMMUNICATION

It is a subject that many managers have no experience with, and others have way too much – claims. What do you do when something terrible happens? What if the owner wants to file a claim but the board doesn’t? What is the best way to handle claims? I consulted with Berg Insurance Agency’s ClaimsRepresentative, Karen Lundin, for some answers. Here is are some of the things important for managers and board members to understand.

First, remember that unit owners can open claims on the HOA’s insurance policy. A portion of their assessment goes toward insurance premiums, and, as unit owners, they are named insureds on the policy. The insurance agent or broker should contact the manager before filing the claim, but the request to open the claim cannot be denied.

Next, remember that maintenance responsibility does not always equal insurance responsibility. Just because water may have escaped from a burst pipe inside the unit, or a pipe that feeds only one unit, it doesn’t mean that the association doesn’t have the responsibility to insure the damaged property. Every CC&R will give the owner the responsibility to maintain property on the interior of the unit, but many actually give the association the responsibility to insure that property. Have you ever heard the term, “Walls In”? (See the December 2017 Coverage Corner if you need clarification)

The best thing to do is work with an insurance professional who will provide advice and guidance. Ultimately, the most conservative step might be to allow the claim to be filed and let the adjuster determine if there is coverage. The adjuster, after all, is the only one who can. If it is determined that there will be no coverage by the HOA’s insurance policy, the unit owner may need that decline to get coverage on their personal homeowner’s policy. (Bonus – you aren’t the bad guy this time!)

Also, it is important for the Community Manager to understand that they will be the representative for the insured throughout the claim. While it may seem easier to just hand the whole thing off to the unit owner, some adjusters will only accept documents from the representative for the association (i.e. the Community Manager). When it comes to payments, the checks will be made out to the HOA, not the unit owner.

If your management company charges a fee for claims management, you may be able to submit this invoice to the insurance carrier for coverage under “extra expense.” Since this fee is something that would not have been charged had the claim not occurred, it could be a covered expense.

While insurance claims are no picnic, they don’t have to be a horrible experience, either. Keep in communication with your claims representative and your adjuster and make sure your expectations, and theirs, are understood.