Condominium Insurance Law

Wind, Hail, and Hotel Basements: Insurance Companies in the Heartland Will be Busy

Corey Harris — Wed, 22 May 2013 11:04:54 -0500

The last thing a person wants after a long day of traveling is to be evacuated from his hotel room and herded into a basement hallway filled with dated furniture that likely hasn’t seen the light of day in a decade. When traveling to the central states this time of year, however, this scenario is not uncommon. I was in Dallas last week for mediation when the first of the major storm systems began to move through. From the time I landed at DFW, everyone was hurrying to get home before the weather turned bad. Seeing the ominous clouds beginning to build up behind the city’s skyline, it did not come as a total shock when a loud voice came over the hotel’s intercom system advising us that a tornado warning was in effect and requesting all guests to make their way to the lobby immediately. While many patrons gathered at the bar, everyone was soon directed down stairs and into a series of tunnels connecting long forgotten staging rooms in the basement. As I was texting...

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Hailstorm Damage to Commercial and Residential Roofing Systems

Guest Blogger — Mon, 15 Apr 2013 10:10:41 -0500

(Note: This guest blog is by Andrew Smith, a certified roof inspector with Roof Leak Detection Company, Inc.1) Hailstorms are one of the most unpredictable natural disasters that occur throughout the country, primarily, but not limited to, the Midwest and Central states. These storms tend to be semi-seasonal, spontaneous, and typically without warning. When a hailstorm strikes, we seek shelter and enjoy at the spectacle being played out before our eyes. The sound of the impacts pound like a beating drum against the roof flinch at the sound of each thud, and after the storm we go outside check out the damage. We see damaged trees, a carpet of hailstones blanket the yard, and numerous small dents on the hood of your car. So you think to yourself: “Why call the insurance company? They would just come out, take a quick look at my car and tell me that the hail wasn’t big enough to cause real damage. It’s nothing that a wash and wax couldn’t fix. Maybe my rates...

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Agent Negligence Suits to Continue in Florida

Corey Harris — Thu, 14 Mar 2013 10:52:41 -0500

For years, the viability of suits brought by policyholders against insurance agents has been up in the air. On March 7, the Florida Supreme Court decided the long awaited Tiara Condominium Association, Inc. v. Marsh & McLennan Companies, Inc., paving the way for policyholders to recover when they have been damaged by their agent’s negligence. Tiara Condominium retained Marsh & McLennan as its insurance broker and tasked Marsh with securing insurance coverage for the association, including coverage for damages resulting from windstorm. In 2004, Tiara was significantly damaged by Hurricanes Frances and Jeanne. Marsh & McLennan assured Tiara that the policy provided “per occurrence” coverage, meaning Tiara could recover up to the policy limit of $50 million for each storm. This would have created an aggregate coverage of $100 million for the damages sustained. Based on the representations from its broker, Tiara undertook extensive, and expensive,...

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Purchasing a Condominium Unit: Caveat Emptor (Let the Buyer Beware)

Glenn Rosen — Thu, 06 Dec 2012 07:24:48 -0500

According to the Community Associations Institute’s website,1 about 70 million people live in approximately 315,000 community associations throughout the United States. Thus, if you’re about to purchase a new home, the odds are good that you’ll be buying into an association as homeowners associations are not just for condominiums, but also for townhomes and even single family dwellings too. Association living, however, is not for everyone. While many associations offer enticing amenities for members such as community rooms, clubhouses, swimming pools and tennis courts, and take care of regular maintenance, repairs and landscaping of the common areas, associations also come with significant fees as well as lists of rules and regulations encompassed within what are typically called the “governing documents.” These governing documents - usually comprised of the Declaration of Covenants, Conditions & Restrictions, Bylaws and Rules & Regulations -...

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Members Rights Under the Association's Master Policy

Glenn Rosen — Thu, 18 Oct 2012 09:37:41 -0500

The governing documents1 of most, if not all, community interest developments/homeowners associations contain provisions setting forth the rules regarding real property insurance. Typically, an Association is required to obtain and maintain a master policy of fire insurance, naming the Association itself as the insured, for the full insurable value of all of the improvements within the development (the common areas and common structural components of the building including the roofs, exterior walls and exterior plumbing). Individual unit owners are prevented from separately insuring their units or common areas against loss by fire or other casualty covered by the Association’s insurance but may insure their own personal property or improvements they made to their own units. The primary purpose of these provisions is to avoid double coverage by allocating insurance responsibility between the Association and individual owners of a condominium unit. If both the master and...

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Easing Tensions Between An Association's Board And Its Members

Glenn Rosen — Thu, 27 Sep 2012 11:33:19 -0500

At sundown yesterday evening, the Jewish holiday of Yom Kippur, also known as the Day of Atonement, came to an end. As the holiest day of the year for the Jewish people - and with its central themes of atonement, repentance and forgiveness - the holiday gave me cause to think about the tensions that exist between a homeowners association board of directors and its members and how those tensions might be eased with some common sense approaches. When you live in a community governed by an association, you must abide by the association rules. But what if those rules conflict with state or federal laws, such as the Americans with Disabilities Act or with first amendment/private property rights? Either common sense of the parties will prevail or a court will decide the issue for them. Any community’s restrictions on exercising free speech must be reasonable as to time, place and manner.1 This means communities may manage residents’ expressions by limiting political signs to a...

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Should Community Association Managers Be Adjusting Insurance Claims?

Jeffrey Greyber — Fri, 14 Sep 2012 07:23:03 -0500

Piggybacking somewhat off of Glenn Rosen’s post, Is Your Association Manager Practicing Law Without a License, this post addresses whether Florida community association managers should be adjusting insurance claims. I recently encountered a situation where a community association manager’s de facto adjustment of an insurance claim jeopardized the insured’s recovery. Distinct skill sets and separate licensing requirements surround the community association management and public adjusting professions, so it seems to me that the professions should rarely (if ever) be blurred. As for community association managers, Section 468.436(2)(a) of the Florida Statutes brings Section 455.227(1) of the Florida Statutes into play. And Section 455.227(1)(o) prohibits “[p]racticing or offering to practice beyond the scope permitted by law or accepting and performing professional responsibilities the licensee knows, or has reason to know, the licensee is not competent to...

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Is Your Association Manager Practicing Law Without a License?

Glenn Rosen — Thu, 13 Sep 2012 06:03:39 -0500

Community Association Managers (“CAM”) are very busy working with their boards of directors caring for the common areas, handling the association’s financial affairs, collecting assessments, and ensuring that the community’s rules and regulations are enforced. Unfortunately, to cut costs, CAMs are frequently asked to prepare forms and provide advice that should properly be dealt with by an attorney. In this regard, both the CAM and boards must exercise caution to avoid having the CAM participate in the unlicensed practice of law.Community Association Managers (“CAM”) are very busy working with their boards of directors caring for the common areas, handling the association’s financial affairs, collecting assessments, and ensuring that the community’s rules and regulations are enforced. Unfortunately, to cut costs, CAMs are frequently asked to prepare forms and provide advice that should properly be dealt with by an attorney. In this...

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Florida 4th DCA Rules Bad Faith Action Can Proceed After Appraisal

Corey Harris — Fri, 07 Sep 2012 13:47:08 -0500

For many years, some insurers have argued that Florida policyholders cannot bring statutory “bad faith” actions if the parties participate in the appraisal process. In essence, these insurers argued that there must be a finding of a breach of contract in an underlying action for an extra contractual action to proceed. Numerous federal judges in Florida have rejected this argument, however until this week there were no Florida state court appellate opinions directly on point. On September 5, the Fourth District Court of Appeals released its decision in Trafalgar at Greenacres, LTD v. Zurich American Insurance Company.1 The sole issue on appeal was whether an appraisal award constituted a “favorable resolution” of an underlying dispute for purposes of filing a bad faith cause of action pursuant to Florida Statue §624.155. The facts are relatively simple. Trafalgar’s property was damaged by Hurricane Wilma and a claim for the damage was submitted to...

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Condo Owners' Class Action Allowed To Proceed Against Citizens

Corey Harris — Fri, 17 Aug 2012 15:03:37 -0500

In 2005, owners of Ocean Beach Resort Condominium began entering into negotiations with a development company for the sale of their individual units. When Hurricane Wilma struck in October of that year, approximately 45 owners had already agreed to sell. The other 21 owners agreed to sell shortly after the storm occurred. In 2006, the developer took possession of all of the units as well as the association. Like many associations, Ocean Beach was insured by Citizens Property Insurance Corporation and made a claim for Wilma damages. Citizens paid part of the amount claimed but refused to pay all amounts requested by the association. After the sale of the units and the developer took control of the association, the former unit owners filed a class action suit against Citizens. The former owners alleged that the property was a “total loss” and demanded that Citizens reimburse them the policy limit contained in the association’s policy. For purposes of standing to sue...

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Florida Ban On Public Adjuster Solicitation Ruled Unconstitutional

Corey Harris — Fri, 06 Jul 2012 14:25:50 -0500

Public insurance adjusters play an important role for many policyholders, both commercial and residential, after a loss occurs. By all accounts, policyholders that retain the services of public adjusters generally obtain larger settlements from their insurance companies and often are able to avoid problems that could delay the claim. In an attempt to curtail public adjuster involvement in claims, the Florida legislature (at the behest of the insurance industry lobby), pushed through legislation to prohibit public adjusters from soliciting policyholders or entering into contracts to representing claimants until 48 hours after their property was damaged. The provision, passed in 2008, read: A public adjuster may not directly or indirectly through any other person or entity initiate contact or engage in face-to-face or telephonic solicitation or enter into a contract with any insured or claimant under an insurance policy until at least 48 hours after the occurrence of an event...

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Electing to Settle on an Actual Cash Value Basis

Corey Harris — Fri, 29 Jun 2012 14:51:15 -0500

Replacement Cost Coverage (coverage for the full cost of repairing and/or replacing damaged property without deduction for depreciation) is an important part of any association’s insurance policy. Whether it is the building or the personal property contained therein, most associations are required, by law or pursuant to the condominium documents, to obtain Replacement Cost Coverage for damages that may occur. The one caveat to Replacement Cost Coverage is, however, that the cost to repair and/or replace the damaged property is not typically owed until the costs are incurred or the work is completed. This means that, under some circumstances, associations would be left with no choice but to fund the repairs themselves and seek reimbursement from the carrier later. Realizing that this would be inequitable, not to mention next to impossible for many policyholders, most policies allow the policyholder to settle their claim on an Actual Cash Value basis (the full cost of repairing...

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Large Hurricane Deductibles Enforceable Regardless of Whether the Policy Complies With Florida Law

Corey Harris — Fri, 01 Jun 2012 16:04:35 -0500

Just in time for hurricane season, the Florida Supreme Court, finally made its decision on numerous important issues that have a dramatic effect on insurance law in the state. As Chip Merlin mentioned in his recent post “Policyholders Lose Rights in Florida Courts,” the Court recently rejected a condominium association’s arguments relating to five important questions of law in QBE Insurance Corporation v. Chalfonte Condominium Association Inc., Case No. SC09-441 (Fla. May 31, 2012). While the analysis and consequences of this thirty-two page decision cannot be fairly summarized in a single post, one important point that will adversely effect many associations is the negative response to the fourth certified question: Does an insurer’s failure to comply with the language and type-size requirements established by Florida Statute §627.701(4)(a) render a noncompliant hurricane deductible provision in an insurance policy void and unenforceable? I...

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Zurich Announces it will Offer Excess Flood Insurance

Corey Harris — Fri, 25 May 2012 14:19:25 -0500

Whether from a hurricane, a broken dam, or a rising river, floods are one of the most common and most costly causes of loss. Because flood insurance is so difficult to obtain, floods are also one of the most feared causes of loss. On May 22, Sergio Leal wrote a post on the Property Insurance Coverage Law blog about the problems currently facing the National Flood Insurance Program. Since most policyholders rely on the NFIP for flood coverage, this is a particularly important debate for associations located on the coast or in flood prone areas. The NFIP has low limits on coverage, generally $250,000 for homeowners and $500,000 for commercial property owners. This is inadequate for most associations. Recently, Zurich announced that it would begin offering excess flood insurance to residential and commercial policyholders in all 50 states. According to the carrier, coverage will be offered for property damage, additional living expenses, and business interruption. With hurricane...

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Conduct Your Due Diligence Before Agreeing to Serve as a Director or Officer of an Association - Make Sure Your Are Protected

Larry Bache — Thu, 24 May 2012 08:55:16 -0500

On October 14, 2011, Corey Harris explained Florida’s standard of director’s liability in his blog post, Am I Personally Liable Simply For Being A Director? As he noted, “[t]he longstanding precedent discussed in Munder v. Circle One Condominium, Inc., 596 So.2d 144 (Fla. 4th DCA 1992), provides that directors are immune from individual liability unless a crime or fraud has been committed or there has been self-dealing or unjust enrichment. As a result, negligent actions are not individually actionable, even if such actions are clearly wrong.” Serving as a director or officer of an association is important. It takes time, energy, and resources. Every association needs intelligent and capable people on its board and as its directors. It is a privilege to be offered such a position and gives many people the opportunity to serve their community faithfully and with due care. Unfortunately, accusations and mistakes occur, so one of the most important things an...

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Florida Statute §718.111 Provides Guidelines that Associations Need to Follow

Larry Bache — Thu, 17 May 2012 13:03:51 -0500

Post-loss compliance is a significant element of the adjustment process. Policyholders can take the proper precautions and be prepared for potential losses, however, as illustrated in Denise Sze’s recent post on our Property Insurance Coverage Law blog, Courts Affirm that an Insured Must Comply with Post-Loss Duties, a policyholder’s failure to comply with a policy’s post-loss obligations may lead to a forfeiture of the claim. Post-loss obligations are more complicated in claims presented by condominium and homeowners’ associations. The document and records requests can be overwhelming. Often, associations do not know the limits of their obligations: what type of documentation is it responsible for, and how long is it required to keep such information. Florida Statute §718.111(12) provides guidelines that associations must comply with. Among other things, the statute requires associations to maintain a copy of the association’s bylaws, a copy of the...

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Insurance Policies And The Exception To Exclusion Can Feel Like Trying To Fit The Pieces Of An Intricate Puzzle Together....Without Forcing Them

Shaun Marker — Mon, 23 Apr 2012 05:30:22 -0500

The coverages, limitations, exclusions and exceptions to exclusions buried in all those pages of property insurance policies can leave your head spinning when trying to make sense of it all. It can feel like trying to navigate through a complicated maze or fit all of the pieces of an intricate puzzle together without forcing them. This was demonstrated recently in a federal case from the Northern District of Florida, Bartram, LLC v. Landmark American Insurance Company, 2012 WL 1072207 (N.D. Fla. March 30, 2012). The case involved an insurance coverage dispute between the apartment complex, Bartram, LLC, and several insurance carriers for damages stemming from faulty workmanship in the construction of the complex. There was primary coverage and three layers of excess coverage provided under builder’s all risk insurance forms. Each insurance policy excluded faulty workmanship from coverage. The policies also contained ensuing loss exceptions that provided coverage when “an...

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Court Orders Forensic Examination of Association's Computer Systems

Jeremy Tyler — Mon, 16 Apr 2012 05:30:00 -0500

We live in a digital age, where information is stored and transmitted electronically, often with little regard to the science and technology that makes it possible. Digital information is much different than traditional hard copy, print, or other physical information. Electricity, magnetic disks, and fiber optics allow information to be created, modified, transferred, and destroyed in an instant. Electronically stored information (ESI) is everywhere and plays an important part in the operation of almost every business. It should come as no surprise that issues regarding ESI often arise in litigation, especially when large corporations such as condominium associations and insurance companies are involved. Recently in a South Florida federal court, a discovery dispute arose when an insurance company sought a forensic examination of an association’s computer systems. In Wynmoor Community Council, Inc. v. QBE Ins. Corp., 10-62411, 2012 WL 716480, *5 (S.D. Fla. Mar. 5, 2012), the...

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Claims Handling and General Business Practices Deemed Discoverable in First Party Breach of Contract Case

Corey Harris — Tue, 10 Apr 2012 15:59:18 -0500

While relying on its investigation to make determinations as to coverage and the amount of damages after a loss has occurred, insurance companies often take the position that their claims handling processes, general business practices, and financial incentives to delay, underestimate, and/or deny claims are not relevant or discoverable in litigation over breaches of the insurance contract. While some courts have bought in to this proposition, the tides are turning as more and more judges are seeing the disingenuousness of the argument. This issue recently arose in Summit Towers Condominium Association, Inc. v. QBE Insurance Corporation, a breach of contract action by the association over Hurricane Wilma damages. During the discovery, Summit Towers’ attorneys attempted to illicit testimony from QBE’s Corporate Representative regarding, among other things, QBE’s claims handling procedures, reinsurance information, and financial incentives (also known as contingent loss...

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The Importance Of Disaster Response Plans For Associations Cannot Be Downplayed--Part 2

Shaun Marker — Mon, 09 Apr 2012 15:32:03 -0500

Plan for the worst; hope for the best. This is an old adage that has taken shape in various places in the realm of planning. If you have really planned for the worst and given it thought, then the element of surprise is hopefully eliminated. The destructive impact of tornadoes in the Midwest and Texas cannot be understated. Residents of an apartment complex in Virginia Beach were surprised by when a plane crashed into their buildings; thankfully no one was hurt. Other areas of the country are on the verge of another hurricane and wildfire seasons. Given the close proximity of unit owners in community associations, the impact of natural disasters can sometimes seem to be compounded. We have previously discussed the importance of disaster plans for associations in the July 4, 2011, post The Importance of Disaster Response Plans For Associations Cannot Be Downplayed. What should associations and their representatives include in their disaster plans? The following is a general list of...

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