Filing a Successful Claim
By Joel W. Meskin, Esq., CIRMS
Copyright © 2008
No matter how well a community is managed, as sure as there is death and taxes, at some point there will be an incident that will give rise to a lawsuit or claim. In a perfect world, upon the happening of such an incident, the association would make a single phone call to the insurance company, provide the requested information and the insurer would immediately make a direct deposit for the claim into the association’s account or arrange any other requested solution or remediation. .
In the real world, the process is not always that simple. However, it does not have to be as complicated or as frustrating as it often is. The fortunate fact is that most associations do not have claims on any regular basis. The consequence of this, however, is that most associations are not adequately experienced in the claim’s process and many do not have or do not think to seek assistance from professionals who are experienced in claims handling.
Contrary to the belief of many board members, most insurance companies do not sit back and try to figure out ways to deny claims. Insurance companies are in business to make money and if they do not have satisfied customers, they do not sell insurance.
What insureds must keep in mind during the claim process is that not every potential risk is covered by insurance. This is generally the result of one of two factors: (1) the risk is not insurable (such as normal wear and tear of an association’s property); or, (2) the insured made an economic decision not to purchase all or the broadest available coverage – the price factor.
The number one identified mistake by associations involve giving notice of a claim, occurrence or loss. The origin of this “critical” mistake is based in the insured’s lack of experience. What often happens is that when an inexperienced board member is served with a summons and complaint they immediately contact the first attorney that comes to mind. With the best of intentions this attorney very often negatively impacts the insured’s position because he or she does not understand insurance. The following are common Notice mistakes:
- Forgetting to notify all carriers– Most associations have numerous components to their insurance program, but do not notify all.
- Not Understanding Pre-Notice issues – Failure to notify the carrier immediately may impact the insureds rights under the policy including the payment of attorney fees and costs.
- Untimely reporting–The timeliness issue also takes on different consequences depending on the type of loss or claim that is being contemplated. For example, “property” loss claims require active steps by insureds to “mitigate” damages and to prevent the exacerbation of a loss. This is particularly the case in water damage claims where the notorious and infamous “mold” potentially lurks in any such claim.
- Failure to Follow-up – Insureds should make sure they received written responses that the claim has been received by the “insurer.”
The failure to communicate, as my wife so often tells me, is the root of many problems. In the claim context, this failure takes on many shapes and sizes.
- many associations approach the claim situation as an “adversarial” process and only provide that information they think the carrier needs to know requiring the carrier to come back multiple times with additional follow-up questions.
- associations do not designate a single person to be the liaison for the association regarding a claim: “too many cooks in the kitchen.” Accordingly, there is inconsistent and incomplete information being provided.
- Third, associations hold back information thinking that it may have a negative impact on coverage. The reality is that what will be will be and that the association should err on the side of providing information and let the carrier determine what is or is not needed.
The failure to properly document a loss or to keep records of what has happened is a critical flaw in the resolution of many claims.
- The document process for associations must start far in advance of any claim. The associations often do not have any procedures or protocols for pre or post claim situations.
- Associations and managers often do not thoroughly record or memorialize claim information or relevant facts and circumstances
- The key requirement of a claim representative is to document his or her file. The source of those documents is the association.
- Although it may sound obvious, many associations and their agents or representatives fail to take pictures of damages and other physical evidence of a claim. This would also include video taping of various situations if appropriate. We all know that “a picture tells a thousand words.”
Failure to Properly use Contractors and Deal with Repairs
A common mistake identified by many experts involves property damage claims. As we know, most insurance policies require the mitigation of damages and to address emergency situations. However, what many insureds fail to do is limit the fix to those issues and continue the work, sometimes at the encouragement of contractors, before they are approved by the carrier. As indicated, the adjuster must dot his/her “i(s) and cross his/her “t(s)” before approving a claim.
Key advice for associations or their representatives for smooth and effective submission and handling of a claim.
- Call your attorney and request his or her input as soon as possible (an ounce of prevention is worth a pound of cure)
- Consult with your association’s insurance agent to ensure all coverage requirements are satisfied in a timely manner. (As another professional has also pointed out, make sure your insurance agent is not just a salesperson, but also is an advocate for the association at the time of loss. This is where the insurance professional’s experience in this industry is very crucial).
- Document everything; take loads of pictures and video if possible
- Do not execute a contract without talking it over with your attorney first
- Beware of assignment of insurance proceeds clauses / one-page contracts provided by contractors
- Engage the services of a licensed engineer that is qualified to oversee the association’s efforts
RECOMMENDATIONS FOR CLAIM PREVENTION
Governing Document Reviews and Updates
Board Education and Training
Roberts Rules of Order
Early Intervention and Alternative Dispute Resolution