When it comes to claims, everyone wants to know who is going to pay for the damage. If you live in a condominium there are several forms of insurance coverage offered by insurance companies. Most will insure the structure to the drywall, but in California you have very little regulation from that point forward. For the purpose of these procedures I want everyone to assume the HOA’s insurance policy will cover ALL parts of the building, inside and outside. To say it another way, “if it’s part of the structure then it’s insured on the HOA’s master insurance policy”. So what happens if a pipe breaks in the wall between units? Or the supply line to my refrigerator ice maker breaks and floods my unit and the unit below me? In either scenario the HOA has suffered structural damage from water and a claim will need to be turned in to the HOA’s insurance carrier. Insurance coverage is not accepted or denied based on where the water came from, instead consider whether it’s a “sudden and accidental” discharge of water flooding one unit or multiple units, the HOA’s insurance carrier will need to respond. Here are a few steps to follow when you suspect water damage and a possible claim.
1. Report the claim to the HOA’s insurance agent immediately. They should notify the board and management company of the potential claim.
2. Notify your personal insurance agent immediately. The HOA has no responsibility for damage to your personal property or living expenses regardless where the water came from.
3. When the HOA’s insurance is involved the CC&R’s put the authority to control the claims process on your board of directors. Although most boards may want to pass on their responsibility and give it to management, they are the ones responsible to control the claim. Board members will also be the ones to hire the contractor, not the unit owner!
4. If possible, establish a “Claims Coordinator”. This is someone assigned by the board and delegated with the responsibilities to be the liaison to the unit owner, the board, the adjuster(s) and the contractors. This should be someone who lives in the community and would welcome the responsibility to oversee the process; someone with genuine concern for the community. i.e. This is the same type of person who has set up the neighborhood watch program.
5. What if the damage is less than the HOA’s deductible? The HOA still has a responsibility to make the unit whole. Walls and flooring will still need to be dried out. Doing nothing will turn a small water damage claim into an expensive mold remediation nightmare and a possible negligent liability claim.
6. Lastly, work together to create a successful outcome. Community living is about a sharing in common for like-minded people, be good neighbors!
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