Homeowners Associations
Every dollar the carrier doesn’t pay comes out of reserves or assessment to the members.
Clubhouses, pools, gates, fencing, signage and common property. The homes belong to the owners and the association insures what the governing documents put on it — which makes the common areas the whole claim, and makes the claim a fiduciary decision the membership will see the result of either way.
What the association insures
Review the following
- Your policy and governing documents decide what the association insures. Review them before anyone decides what goes in the claim.
- The homes are insured by the owners under their own policies. The association has no claim on them.
- Townhome and villa communities are the exception worth checking. Some governing documents put roofs, exteriors or party walls on the association, and that changes the claim entirely.
- Where the documents are unclear, the answer is in the documents and not in what the last board did.
Deductible and assessment
- Find out whether your deductible is a flat amount or a percentage, and what it is measured against. §627.701
- Prepare the assessment on day one, not at the third meeting. The deductible, any code upgrade the policy won’t pay, any shortfall if the limits are stale, and professional fees.
- Whatever the policy doesn’t pay comes out of reserves or out of an assessment, and members handle that far better when it arrives once, early, with the reasoning attached.
- Tell the members to check their own policies for loss assessment coverage. Many homeowners policies carry some. There’s no statutory minimum for an association member, so the amount is whatever each owner bought.
For the board: one voice to the carrier, and a record the membership can read
- Assemble the records before you’re asked. The full policy with every endorsement, seven years of work orders and vendor invoices, the board minutes that discuss the property, and the last independent insurance appraisal.
- Notify your property management company as soon as possible to start the process, while nobody is under pressure.
- Members are entitled to the association’s official records, and the current insurance policies are official records. §720.303
- After a declared emergency the board has additional powers, including contracting for debris removal and repairs to protect the property. §720.316
- Tell the members what the association is claiming and what it isn’t, early and in writing, so they know to look at their own policies for their own property.
What to look for in your policy
- Your named-storm deductible and your all-other-perils deductible, and what each is measured against.
- The schedule of values, and whether every structure the association owns is actually on it.
- When the limits were last supported by an independent appraisal.
- Coinsurance, and the figure the penalty is measured against.
- Ordinance and law coverage, if you have it and its limit.
- Whether the policy is written replacement cost or actual cash value.
- The sublimits. Landscaping and trees, signs, fences, pool and deck equipment, debris removal, docks and seawalls.
- Equipment breakdown, and whether pool equipment, gates and lift stations are scheduled.
- Whether the community carries flood, and how those limits line up against the low-lying common areas.
- Windstorm coverage, and whether it’s written on the same policy or placed separately. §627.712
- Yearly renewals often change coverages in previous policies. Review all endorsement changes yearly.
After a homeowners association loss: Dos and Don’ts
Dos
- Notice the claim first and supplement later. The count of what was damaged takes weeks. The notice takes a phone call.
- Read the declaration and governing documents before deciding what goes in the claim. They decide what the association insures.
- Walk the entire community, not just the clubhouse. Gates, walls, signage, lighting, courts, docks, drainage.
- Photograph and video everything before anything is cleaned up or replaced.
- Notify your property management company early and start assembling seven years of records.
- Tell the members what the association is claiming and what it isn’t. They need to look at their own policies for their own homes.
- If the community carries flood, treat wind and flood as two claims. Two policies, two carriers, two deductibles and two sets of proof.
Don’ts
- Don’t spend association funds on damage to a member’s home. The homes belong to the owners and so do their policies.
- Don’t apply that to a townhome or villa community without reading the governing documents first. Some put roofs, exteriors or party walls on the association.
- Don’t forget the structures nobody thinks of as buildings. Walls, gates, pump houses, lift stations and mailbox structures get left off schedules and off claims.
- Don’t let landscaping be written off as an act of nature. Trees and irrigation are usually covered property with a sublimit, and the sublimit is the thing to find.
- Don’t let the wind claim be called all flood. Not without elevations, water lines and an engineer who actually looked at the property.
This isn’t everything. Your policy carries conditions and duties that apply after a loss, and they’re yours to meet whether or not they appear here. Read your own policy in full. If something in it doesn’t make sense, call me — it’s a twenty-minute phone call about the loss, whether or not you hire me.
These are the ones specific to this kind of loss. Select the link for the Dos and Don’ts that apply to every claim.
The call that matters
If your association has had a loss, call or email me. It’s a twenty-minute phone call about the loss, and I’ll tell you what an assessment is likely to look like and what to have assembled before the carrier asks for it.
You stay in control of your claim. That’s the whole point.