Insurance Loss Assessment

We had a bad hail storm in September which caused about $3 million in damage. In addition to our individual insurance policies, we have an association insurance master policy. The insurable value for 112 townhouses is over $23 million. The hail deductible is 2%. Each homeowner is required to pay a special assessment of over $4,000 to cover the deductible.

Five weeks after the storm, the builder turned over the association to the homeowners. We have advised the homeowners to contact their HO-6 policy insurance agent to file a loss assessment claim under their individual policies. We have received numerous calls from irate homeowners. The builder never provided ANY information about the master policy coverage. Not many homeowners knew they should have deductible coverage on their HO-6 policy - many are first-time association members.

Also, there have been 3 homes sold between the time of the storm and the builder turning the management over to us.

We are aware that we might have to file liens on some homes, but are there any other problems we might expect? What recourse do we have on the homeowners that sold after the storm? If we can't collect from the previous owner, is the builder (who managed the association at that time) liable for their deductible since they didn't take care of it before turning over the association to us?

Hail deductible is apparently computed at 2% of $23 million insured value - which, when divided by number of units, comes out to something slightly over $4,000. I suspect that folks who said they were unaware of the deductible could find some reference to the insurance buried in the pile of documents they received at the time of purchase - but, as the president of a small-medium size association (87 units), I have discovered most buyers don't read the information they are normally given - or at least don't read it very closely. We have tried to make owners aware of the deductible situation by sending owners at special notice each year when we renew our master policy - also our insurance agent, at the time he sends out the certificate of insurance relating to the master policy annually to each owner, makes a point of noting the deductible situation in his cover letter.