Insurance cover is a key component in any homeowner's association (HOA). Often, disasters strike unexpectedly, and if not handled in advance, it can cost your association thousands in damages. By taking up insurance, you get to unburden yourself from the financial responsibility of dealing with these damages.
As a board member, you need to be ready in case any unexpected accidents to ensure your community is covered. But where do you start? Well, understanding your insurance policies and your obligations to the community is the first step.
The second step is simply knowing how you can file an insurance claim for your HOA. Here are some simple tips and steps to ensure you don't get unnecessary delays or rejections.
One mistake people generally make when it comes to insurance is assuming that they are covered for things they are not. Some common HOA insurance claims filed by the HOA include:
However, you'll find that most policies don't cover natural disasters like flooding or hurricanes. And the policies that do cover such will likely have larger deductibles.
As HOA board manager, it is your responsibility to revise the coverage for clarity. Check that the cover fits all the community's needs. It should also reflect on the current property values and cover the most vulnerable areas. This includes key things such as:
Before submitting the claim, it is also crucial that you check on the bylaws and understand who exactly is liable for the damages. This can either be the homeowner or board.
All this information is usually included in the HOA's bylaws. The bylaws typically define a common area in the building and what is taken as the unit owner's personal property.
After establishing what is, the HOA then takes up general liability insurance covering the common or shared elements like the roof, amenities like gym and pool, and the building's exterior. This will be included in all the owner's monthly dues.
On the other hand, the unit owners also have their insurances called the HO6 insurance policy. This covers the unit owner's belongings, property, and basically everything inside their unit's walls.
In most cases, when an HOA files for property damages, it is due to structural damages done to common areas and damages to multiple condos. But when the damages are too widespread, it can be a bit difficult to account for all the insured losses. Well, this makes the process of recovery really hard, and the insurance firms will use this to their advantage.
The most common reason for denying a claim in this instance is that there is not enough documentation of all the damages. Other times, they'll say that the one who filed failed to notify the insurance company on time. Even the most legitimate claims can be denied due to such reasons. Therefore, always make sure to cover all the loopholes.
Most policies require that you report a claim as soon as reasonably possible (preferably days, not months). This is so that the insurance company can investigate the claim while still fresh, interview witnesses and then come up with a reasonable settlement offer.
If you wait too long, your claim could be denied. The board needs to know that the insurance carrier will not be liable for the pre-tender lawyer fees.
Usually, for a self-managed board, the claim will be reported through an insurance broker or agent. If the board has a manager, then the manager is charged with the task. This is the most cost-efficient way to do it. Alternatively, you can use your legal counsel to make the report on your behalf.
If you are the one charged with this responsibility, we can't emphasize enough on filing the claim as soon as possible to avoid denials. On the same note, good practice dictates that you always make the report in writing, so the board can have a paper trail should the broker forget to push the claim to the carrier.
As you've seen, there's much more that goes toward filing an insurance claim successfully for your HOA. It is your job to ensure that the claim goes through undisputed, so you can save your community members from the financial obligation after they've been paying their dues. If you need any assistance realmanage is readily equipped with the skills to help.