Your association has just suffered a major disaster, such as a fire, tornado, hurricane or water-damage claim. What should your homeowners’ association (HOA) or condominium owners’ association (COA) do now?
Remember, the HOA’s insurance policy has duties in it that must be followed, as well as conditions the HOA must comply with. Your failure to follow these conditions could result in the claim not being covered in full, or possibly not at all.
Here are the most important steps to take so your association has the best chance of receiving full payment from your insurance company:
• The policy states you must protect the property from further damage. As soon as possible, board up any broken windows, secure the doors, and put a tarp over the roof if there are holes in it. If you don’t this, and the property sustains additional damage, the insurance company may not pay for the additional damages.
• The insurance company will want to determine exactly what caused the damage. This is especially true for claims involving fire or water damage. It is important not to alter the scene until the insurance adjuster has arrived and performed a “cause and origin” investigation.
This means that once you protect the property from further damage, you should leave the scene just as you found it until your insurance company advises you that it is okay to change it. The insurance company will examine the evidence to determine what caused the loss and whether there are other responsible parties for the damages that have been incurred.
• The insurance policy also states that the insurance company has the right to inspect the damaged property at any time. This means you should not perform repairs until the HOA and the insurance company agree in writing on the scope and cost of repairs. You should not move forward and start repairs until everyone is in agreement on the work that will be done.
• If multiple units are affected, the unit owners will have to make arrangements to move all of their belongings out of their units so repairs can be made. The unit owners will need their own policies to cover their moving expenses because the HOA or COA policy will not cover moving costs. If the damage is significant, the owners will most likely have to live elsewhere while repairs are being conducted.
There are many other duties and conditions that your HOA must comply with after a disaster. Should a disaster strike your HOA, you may wish to consider retaining professionals to help you get through the maze of an insurance claim. Look for public insurance adjusters who are members of NAPIA, the National Association of Professional Insurance Adjusters.