Homeowners Insurance Claims

A property insurance claim can be a devastating and life-altering event for a policyholder, but for an insurer, it is routine business.

An insurance claim is a business negotiation, and policyholders must approach the adjustment and settlement of their property insurance claim as they would any other business transaction involving a large investment. Few homeowners would risk the value of their home without substantial research and strict oversight, and an insurance claim should be treated no differently. A residential property claim involves restoring or replacing the property – both the structure and the personal property inside the dwelling – to pre-loss conditions within the limits of insurance purchased. Policyholders are faced with the tasks of investigating and documenting losses and learning the terms and conditions of insurance policies.

If only part of a structure or its contents is to be repaired or replaced, issues arise if the repaired portion cannot match with the remaining undamaged property. If repairs are obvious, they may diminish a property’s value. Although language varies with each particular policy, policyholders may have the right to demand that covered property is restored to a seamless pre-loss condition.

Insurance companies should be sending licensed insurance adjusters to your property; however, sometimes the first responders sent to assess the damage are not qualified. It is important to ask the person who visits your property for a business card, and it should state a first and last name and all license numbers (they should be licensed with the state). Another smart procedure is to write down the name and specific purpose of everyone who visits your property. While it is common to be in a state of distress, you must be attentive and careful when signing any documents. Cooperating with insurance companies is a part of all policies, and you must think about who has your best interests in mind. The representatives are there to assess coverage for your loss, but they are working for the insurance company, not the policyholder. You have the right to hire an attorney who can help you understand all the information surrounding your policy and claim, as well as negotiate with the insurance company.

Condominium Association and Community Association Property Insurance Claims.

When a disaster results in damage to condominium or community association properties, the association’s manager and board of directors are responsible for filing insurance claims. For those who are new to condominium association responsibilities, or for those who undertake the responsibilities as a volunteer, it may seem a daunting task. Common ownership is defined by state statute, deed, or association declarations and bylaws. These instruments define the coverages required and apportion responsibility between the community association and individual owners.

Filing a property insurance claim for association property is easiest when the task is broken down into clear and manageable steps:

(1) Determine the Insureds and the Applicable Policies of Insurance
When a loss occurs, the association must first determine where the damage occurred — is the damage contained within association property or does it extend into any individual unit, and has the structure suffered damage as well. The location and extent of damage will determine the coverage, insureds, and the applicable policy or policies of insurance. In most states that have enacted condominium or community association laws, associations are required to insure every common building and structure to some extent, including the portions deeded as individual unit owner property when the individual units are separated by horizontal boundaries. The extent of coverage varies among states and associations.

(2) Verify Insurance Coverage
Once the association determines the cause of a loss, extent of the loss, and the respective responsibilities of the association and unit owners, the next step is to review the applicable policies of insurance, including: primacy of any association and individual owner insurance policies, the terms of insurance coverage, limits of insurance coverage, deductibles, exclusions, limitations, endorsements, and coinsurance provisions. The specific terms of one policy may fill coverage gaps in the other or provide insurance coverage to meet the other policy’s deductible. It may be helpful to prepare a chart to define and compare the coverages, exclusions, endorsements, and limitations in each insurance policy.

(3) Investigation
The association should recognize and document the damage, coverage issues, and the scope of the loss and claims under each applicable policy. The benefits may be payable to the association or a trustee charged with supervising repairs.

(4) Settlement and Recovery
Settlement and recovery under an association policy will necessarily involve the association board members and directors. The association, not the individual unit owner, will likely be the loss payee and may have the authority to accept or reject proposed repairs and offers to settle the claim.