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Subject: Insurance Loss Assessment
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Author Messages
LindaJ


Posts:0


12/07/2005 2:05 AM  
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?
RogerB
(Colorado)

Posts:4896


12/07/2005 7:55 AM  
LindaJ, why is each homeowner required to pay a special assessment of over $4,000 to cover the deductible? Is this math wrong:
(2% deductable x ~$3,000,000 damages)/112 units = ~$536/unit

You need help from a competent professional now; needed one at the time of the hail storm; and always need one during transition from developer to owners.

This is a good example of why Owners need to be made aware of potential financial consequences to them resulting from poor decisions made by their Board of Directors. This is particularly true during the period when the developer controls the Board. I strongly encourage educating owners and effective communications will help reduce apathy.

One thought on the three home sales, the buyers may have recourse through title insurance provided at closing, depending on the Certificate of Status of Assessments issued by your association.

Sorry for your loss,
Roger
JohnK
(Minnesota)

Posts:5


12/09/2005 7:57 AM  
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.
LindaJ


Posts:0


12/29/2005 7:07 AM  
Roger and John, thank you for your reply. John, you are right about the computation of the deductible. My husband is the new president of our association, and will see that all the pertinent insurance information is sent to every homeowner, going forward. As for the owners not reading the documents provided by the builder, you are right. However, no one received insurance information from the builder or the agent. The agent said they sent the information to the builder (who also managed the association until recently), but the builder never provided this to any homeowners. Thank you, again, for your help.
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Forums > Homeowner Association > HOA Discussions > Insurance Loss Assessment



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