Everything You Need to Know About HOA and Condo Association Insurance Claims

In the aftermath of a disaster, many community associations are blindsided by the extent of financial repercussions. HOA and condo associations typically rely on their HOA and condo association insurance policies for the necessary funds to rebuild after structural damage. Yet, navigating the recovery process proves challenging.

Grasping the nuances within the intricate homeowners’ association and condominium association’s insurance policies is vital. These policies are crafted to safeguard both the physical structure and the financial stability of the association. 

However, for condo and HOA insurance companies, it often proves more cost-effective to evade payouts rather than compensate for damages. These companies are adept at leveraging policy terms to their advantage, which, while frustrating, is a common practice. 

Understanding the specifics of condominium insurance claims and homeowners’ association insurance claims in Florida is not just about legal protection – it’s about ensuring the resilience and recovery of your community.

Damages in HOA and Condominium Insurance Claims

Understanding the scope of potential damages covered under condominium insurance claims and HOA insurance claims is crucial. Here are the types of damages that are commonly involved in insurance claims by condominiums and HOAs in Florida.

• • Storm and Hurricane Damage: Storms and hurricanes can cause catastrophic damage to both individual units and common properties managed by HOAs and condominiums. The damages from such events can range from minor leaks to complete structural failures. Insurance claims in these scenarios are crucial as they provide the necessary funds for repairs and rebuilding efforts, covering costs associated with wind, rain, and flying debris. 
  • Fire and Smoke Damage: Fires can break out unexpectedly and spread rapidly, endangering lives and property within condominiums and HOAs. The aftermath of a fire may include not only the destruction of property but also lingering smoke damage, which can infiltrate walls, carpets, and furniture, making the environment unhealthy and inhabitable. 
  • Water Damage: Water damage is among the most common issues faced by condominiums and HOAs, and it can arise from various sources such as floods, pipe bursts, and leaks. This section discusses specific instances including:
    • Broken Water Lines: Over time, water lines may deteriorate or become damaged. The costs for repairs and mitigating future risks are typically covered under HOA and condo insurance claims.
    • Broken Water Heaters and Sprinklers: Broken water heaters and malfunctioning sprinklers can lead to substantial water leakage, damaging floors, walls, and personal property. Condo and homeowners association insurance claims play a crucial role in addressing these damages, covering the replacement and repair of faulty systems and the restoration of damaged property.
  • Roof Damage: The roof of a building is its first line of defense against the elements. Condo and HOA insurance policies typically cover the repair and replacement of roofs, ensuring that buildings remain secure and residents are protected from the elements.

• Damage to Common Areas: Common areas in condominiums and HOAs, such as lobbies, elevators, swimming pools, and parking structures, are essential for the functionality and appeal of these communities. Damage to these areas can disrupt daily life and diminish the quality of life for residents. Condo association insurance and HOA insurance are crucial for funding the repairs of these damages.

Condo insurance claims and HOA insurance claims ensure that communities are well-prepared to handle a variety of damages, providing the financial support needed to undertake necessary repairs, maintain property values, and ensure the safety and satisfaction of all residents. 

What Does Homeowners’ Association Insurance Cover?

HOA insurance is designed to cover damages to common areas managed by the homeowners’ association. These areas typically include community pools, clubhouses, gyms, gates, and other shared spaces that all residents use.

The scope of HOA insurance coverage can vary significantly from one community to another, but there are general consistencies in what is included:

• Property Damage: This includes coverage for damage to communal buildings and common areas from fires, storms, and other hazards.
• Liability Protection: If someone is injured in a common area, liability protection helps cover legal and medical costs that the association might face.

While the HOA insurance policy is comprehensive, it does not cover everything. Individual homeowners are responsible for obtaining their own insurance to cover the interiors of their homes and personal property. HOA insurance generally does not cover:

• Interior Damage: Damage inside an individual unit, such as water damage to walls or personal property theft, is not covered.
• Personal Liability: If a guest is injured inside your home, your personal liability insurance, not the HOA’s, would need to handle it.

Given the limitations of HOA insurance, homeowners should consider additional policies to protect their assets and financial well-being. Individual homeowner’s insurance can fill the gaps left by the HOA’s master policy, ensuring coverage for personal property, interior damages, and personal liability.

What Does a Condo Association Insurance Policy Cover?

Condominium association insurance offers protection in a variety of scenarios, but its coverage depends significantly on the type of policy adopted by the association. In Florida, two primary types of policies exist: the bare walls-in policy and the all-in policy.

• Bare Walls-In Policy: This provides the most basic level of coverage. Under this policy, the insurance is limited to the structure of the building itself. It covers elements like the walls, roof, floors, and elevators. Importantly, this type of policy does not extend to individual units’ interiors, such as appliances, interior walls, fixtures, and personal belongings. 
• All-in Policy: Contrasting with the bare walls-in, this is a more comprehensive solution. This policy not only covers the structural elements of the condo building but also includes fixtures, installations, and improvements within the individual units.  This reduces the need for extensive personal property insurance, though condo owners may still want to secure coverage for their belongings and any high-value items not included under this condo association insurance coverage.

The scope of your condo association’s insurance coverage is critical when dealing with condominium insurance claims in Florida. Assessing the differences between different condo insurance ensures that the property and personal assets are adequately protected against potential damages and liabilities.

Reviewing the Policy When Filing a HOA/Condo Association Insurance Claim

When the HOA/Condo Association submits a claim, it is important to review and understand the bylaws to determine whether the association or the unit owner is responsible for covering the damages.

HOA/Condo Associations provide bylaws, which are governing guidelines. The bylaws should cover items such as: how often meetings are held, how many people are on the board, and what defines the common elements or areas of the building, versus what is considered to be the individual unit owners’ property.

Additionally, the HOA/Condo Association provides hazard and liability insurance, as part of the unit owners’ monthly condo dues. The policy covers common elements and shared features such as the roof, the exterior structure of the building, and amenities, such as the pool and gym.

On the other hand, individual unit owners have their own insurance, also known as an HO6 insurance policy. This provides condo/unit owners coverage for their own properties, belongings, and everything within the walls of their individual unit(s). This policy also protects against liability claims and helps cover the costs of living if the unit is uninhabitable.

Why Are Insurance Claims Delayed, Underpaid,  and Denied?

Insurance claims related to condominiums and homeowners’ associations in Florida are crucial for maintaining the safety and functionality of these communities. Entities dealing with such insurance claims face unique challenges that often lead to delays, underpayments, and denials of claims.

1. Complex Policies and Coverage Issues: Condominium insurance claims and HOA insurance claims often involve intricate policy details with multiple layers of coverage that can overlap or conflict. The complexity of these policies can lead to misunderstandings about what is covered and under what circumstances, leading to disputes and denials of claims.
2. Valuation Disputes: Determining the value of damages for condo insurance claims can be contentious. Insurers may underpay claims by undervaluing the cost of repairs or replacement. This is particularly common in cases where older buildings or common elements require extensive updates to meet current codes.
3. Loss Assessment Coverage Confusion: Loss assessment is a critical aspect of homeowners association insurance claims, where the damages involve communal property. Insurance companies often challenge these claims based on the specifics of what individual policies cover versus what is under the association’s master policy.
4. Delayed Claims Process: Insurers may drag out the claims process, causing significant delays. This tactic can be used as a strategy to pressure the association into accepting a lower settlement than deserved, especially when they face urgent repair needs.

The complexities of insurance claims can be daunting. Whether it’s dealing with condo association insurance or homeowners’ association insurance claims, legal help is often necessary to effectively manage and advocate for rightful coverage. Contact our Florida insurance claims attorneys at The Morgan Law Group today to learn how homeowners’ associations, condominium associations, and even townhome associations file property damage claims.