Property Managers Fees and Property Insurance Claims

Property managers often include extra fees in their management agreements when having to help an association through an insurance claim and reconstruction. My experience has been these fees have risen significantly from extra hourly costs to as much as ten percent. While some may argue that a property manager is neither trained nor licensed to adjust claims and that property management firms may be practicing law or public adjusting without a license, the issue for recovery of these fees is important.

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Assessments Following Catastrophe Losses in Texas

Does an HOA have power to levy assessments following catastrophe losses? In Texas, the answer will likely be, yes. This much was also found true when a homeowner’s association for Leawood Condominiums sued a unit owner for failure to pay assessments in Akhtar v. Leawood HOA.1

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Dealing with Insurance Agents as a Property Manager and Association Board Member

Insurance agent relationships between property managers and association boards are important. Insurance agents are required to obtain the best coverage at the best price. The problem is when different insurance agents, competing for business, start telling property managers and association boards different things about the insurance in place and comparing insurance coverages.

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Property Managers' and Condominium Association Leaders' Hurricane Matthew Dilemma - Financing the Repair Before the Insurance Company Pays

Property managers and condominium leaders will face an issue after Hurricane Matthew becoming all too recurrent following catastrophes—slow and underpaying property insurance carriers. While partial payments for small percentage amounts of easily agreed to damages are often made, full payment made within 90 to 120 days is almost non-existent with significant losses. Who can wait for that long to start substantial repairs?

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Homeowners Association Claim Filed in 2015 May be Covered by a Policy Ending in 1982

Usually the suit limitations provision in a policy dictates when a suit to recover can be filed. However, recently the Federal District Court of Washington held that under certain circumstances that is not necessarily true. In Holden Manor v. Safeco,1 the trial court refused to dismiss a homeowners association’s coverage suit as untimely, notwithstanding the fact that the suit was filed in 2015 and sought coverage under a policy that ended in 1982.

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A Call For All Community Associations!--With An Active Hurricane In The Atlantic Currently Now Is The Time To Review And Refresh Your Disaster Plan

With Danny lurking out in the Atlantic, now is the time to dust off that disaster plan (hopefully there is one in place to dust off from past years) and review it and refresh your memories to make sure it is followed. Let’s face it; it has been ten years since a hurricane has affected South Florida. But don’t let your guard down. While this is predicted to be a less than active season (as it has shown so far) all it takes is one! We have discussed these items before in past years, but I thought now is as good a time as ever for a refresher post.

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Claim Investigation, Negotiation, and Payment in Colorado

There are currently a large number of condominium and homeowners associations pursuing property damage claims in Colorado. With the number of wind and hail storms over the past couple of years, many of these claims are coming with higher dollar values than most policyholders have submitted in the past. One question I continually receive is what obligations an insurance company has in adjusting and paying a claim.

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Recent Case Highlights Need for Code Coverage

As with most important rulings, a recent appellate court decision in favor of a Florida condominium association has been making the rounds through the national insurance news. In Slow, Late, and Delayed Replacement or Repair - - A Case That Helps Policyholders, Chip Merlin wrote about a recent Florida appellate decision in Axis Surplus Insurance Company v. Caribbean Beach Club Association.1 While the trial court rulings in favor of the association were upheld on multiple grounds, the appellate court wrote to highlight why the insurance carrier waived certain time limitation provisions in the policy.

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Property Managers Beware: Think Before You Sign

 My last post talked about new developments that may have a significant impact on the way property insurance is issued in Florida and what role property managers may play in the future. As I stated in that post, property managers often play an important role in the insurance process. Nothing is more evident than the manager’s involvement in the claims process. While it is important for managers to be involved in the claims process, they should understand the effect their actions can have.

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Is Your Association Properly Named On Your Insurance Policy?

Like other types of businesses, community associations rely heavily on their relationship with property managers. Most, if not all, day to day tasks are delegated to managers and management companies. In some instances, management companies have even been tasked with procuring insurance for the properties they manage with the hopes of using a large portfolio to obtain lower premiums.

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Clarify Your Property Insurance Renewal Objectives

(*Chip Merlin's Note: This guest blog is by John Nixon, President and founder of Asperta, Ltd., an independent consulting firm focused on improving the quality of property insurance decisions by policy holders, agents, brokers, underwriters, reinsurers and investors.)

If you follow the insurance press, you’ve probably seen articles describing the favorable results of year-end treaty reinsurance renewals and consequential expectations of reduced pricing and improved terms for account renewals in 2014. The good news for condominium association boards is that it shouldn’t be difficult for most accounts to get improved property renewal terms.

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Who's Really Driving the Hail Bus In Texas?

While the Hurricane Ike litigation is all but over, there has been an undeniable increase in hail claims in the past 24 months that have kept carriers, adjusters, and attorneys quite busy. These claims, and subsequent litigation, have not gone unnoticed.

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Condo Coverage: Unit Owner v. Association Policies

I recently received an email from a reader asking about the difference in insurance policies available for associations and tenants. In sum, the question asked for an explanation of an HO-06 insurance policy and whether that policy is available only for unit owners or for the association as well.

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Failure to Timely Respond to Claims May Give Rise to Claims for Interest in Florida

For a number of years there has been litigation over when, pursuant to Florida law, an insurer must pay interest on amounts that are improperly withheld. While there are differing legal opinions on this matter under the common law, the Florida legislature has enacted statutory provisions that may provide some relief to associations and unit owners that suffer from inappropriately delayed and/or denied claims.

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Selecting A Corporate Representative For Deposition

In almost all litigation, the depositions of the individual parties are important. Often cases rise and fall based solely on this testimony. For associations, however, the party is an organization and not a person. It is therefore necessary for the association to select an individual, or group of individuals, to speak on its behalf as the corporate representative.

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Agent Negligence Suits to Continue in Florida

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.

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

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.

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Members Rights Under the Association's Master Policy

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.

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Easing Tensions Between An Association's Board And Its Members

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.

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Should Community Association Managers Be Adjusting Insurance Claims?

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.

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Is Your Association Manager Practicing Law Without a License?

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 regard, both the CAM and boards must exercise caution to avoid having the CAM participate in the unlicensed practice of law.

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Condo Owners' Class Action Allowed To Proceed Against Citizens

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.

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Electing to Settle on an Actual Cash Value Basis

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.

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

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).

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Zurich Announces it will Offer Excess Flood Insurance

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.

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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

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.”

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Florida Statute §718.111 Provides Guidelines that Associations Need to Follow

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.

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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

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).

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Court Orders Forensic Examination of Association's Computer Systems

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.

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

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.

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

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.

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Insurance Companies Must Identify Policy Defenses with Some Particularity

In first-party property insurance litigation between a condominium association and its insurance company, the parties are generally required to plead the facts of their allegations and defenses in such a way that the judge or jury could apply them to the law. If the party does not plead in such a way, the allegations or defenses may be stricken, dismissed, or the court may allow for amendment.

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Understanding The Term "Associational Standing"

Standing, as a legal concept, refers to the right to bring a lawsuit. To pursue a case as a party in court, a person or entity must show that it was sufficiently affected by the matter at hand. This is a general definition of the legal concept of “standing.” When condominium associations are involved, there is a legal concept known as “associational standing.”

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Florida Law Requires Loss Assessment Coverage for Condominium Unit Owner Policies

Florida Statute § 718.111(4) gives condominium associations the power to make and collect assessments to “lease, maintain, repair, and replace the common elements of association property.” Typically, if common areas owned by condominium associations are damaged or destroyed, the associations may seek to have each of the individual unit owners pay for a portion of the damage. If the loss is one that the association is insured against, the association may still assess unit owners for any costs or liabilities other than what is recovered from the insurance claim.

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Most Insurance Policies Require Insureds To Give Prompt Notice Of A Loss. Does That Requirement Extend To Reopening Previously-Submitted Claims?

There is a lot of litigation from Hurricane Wilma still proceeding in Florida state and federal courts. Much of that litigation has concerned whether the policyholders have complied with their post-loss duties to submit information, documentation and appear for examination under oath. During the last year or so, probably the heaviest litigated issue concerns whether the policyholder gave adequate notice of the loss to the insurer as required by policy terms. Insurers that raise such a defense are looking for a judgment on a technicality, and request the court to declare that they have no responsibility for any damages because the policyholder breached their duty to notify them of the loss.

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Reinsurance Information Can Play an Important Role for Associations

Reinsurance is insurance for insurance companies. Often, insurers will write large policies to condominium and homeowner associations with limits well in excess of the amounts the carrier would be willing to pay if a total loss occurred. Instead of passing on the opportunity to write the policy, insurers typically lay off a portion of the potential liability to reinsurers. By spreading the risk, insurers can limit the amounts payable from their own coffers in the event of a large scale loss.

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Condominium Unit Owners Not Strictly Liable for Damage Originating from Their Unit in Ohio

In condominium associations, where individual owners share a common interest in property and are often within close proximity to each other, it is not uncommon for disputes to arise between individual owners. Resolution of these disputes often turns on how the property relationships are defined by condominium association documents and bylaws, as well as state condominium statutes. In a recent decision from Ohio, the court analyzed the rights and responsibilities between two unit owners when a water leak in a top unit caused damage to a lower unit that was not covered by insurance.

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Understanding Associations' Ability To "Opt-out" Of The Repair, Replacement And Deductible Requirements Of The Florida Condominium Act

Condominium association unit owners, boards of directors and property managers are often faced with questions of responsibility for losses due to water damage within association property and units. Water damage claims are likely one of the most common sources of damage in non-hurricane years in Florida. This problem is complicated by the maze of legal terms within the insurance requirements of Florida Statute §718.111(11).

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Who is Responsible for Limited Common Elements?

Condominium property is often divided and categorized into association property and unit property. Association property can be further subdivided into common elements and limited common elements. How an area of condominium property is classified may change the respective rights and responsibilities of the association and its members, including whose insurance will cover damage to each type of property.

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If a Roof Doesn't Leak, is it Damaged?

(*Note: This guest blog is by Steven M. Thomas, President of Roof Leak Detection Company, Inc., a Certified Testing Laboratory located in South Florida which specializes in testing and consulting services for commercial and industrial properties).

On numerous occasions I’ve had the unfortunate burden of informing building owners that their roofing system is no longer repairable and must be replaced. This revelation, that the roof must be replaced, becomes a big surprise when the tenants of the building report that the roof is not even leaking. “How can that be?” is usually the first question that is asked. Why must it be replaced!?

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Waiver of Subrogation Rights Prevents Lawsuit Between New Jersey Condominium Unit Owners and Association

Is a condominium association responsible for damage to individual condominium units caused by negligent maintenance of common elements? The answer is, “it depends.”

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Playgrounds Are Not All Fun And Games, Especially When They Are On Association Property

I often find that I am writing on this blog about recent court cases involving condominium associations and their property insurance claims with insurers. For this week’s post, I began thinking of another side of potential insurance disputes that associations are faced with. These involve liability issues. Risk management is a big concern for associations and their representatives. Similarly for me, as a new parent, potential dangers are suddenly more visible all around. Many condominium and homeowner associations have playgrounds in their common areas. Playgrounds are nice community amenities, but they can pose certain risks. The ironic thing is that such leisure amenities are often the things that pose increased risks. If injuries occur, the association and its insurer could get sued.

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Condominium Entitled to Matching Components Rather than Patchwork Repairs

Last week on the Property Insurance Law Blog, I discussed a Florida statute that often requires insurance companies to repair undamaged parts of a property in addition to the damaged parts of the property. As discussed, Florida and federal courts have held that Florida Statute § 626.9744 only applies to homeowners’ policies, and not condominium association policies that are considered “commercial residential” policies. See Ocean View Towers Ass'n, Inc. v. QBE Ins. Corp., 11-60447-CIV, 2011 WL 6754063, *9 (S.D. Fla. Dec. 22, 2011). Despite the statute not covering commercial properties, a commercial residential policy may require an insurance company to repair undamaged property as well.

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Can Associations Require Their Unit Owners To Carry Property Insurance?

The short answer to this question is yes, as long as the Declarations address it. A recent case decided January 6, 2012, by a Florida appellate court involved this issue, as well as the association’s claim for attorneys’ fees and costs associated with the lawsuit. Alorda v. Sutton Place Homeowners Association, Inc., No. 2D10–3966 (Fla. 2d DCA 2012).

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Insurance Company Can Only Blame Itself For Ruling on Supplemental Claims

Last week on the Property Insurance Law Blog, I wrote about a condominium association that sued its insurance company for failing to discover all Hurricane Wilma damage. The association discovered additional damage several years after the storm, and rather than file a supplemental claim for damage, the association filed suit. The insurance company claimed that the association needed to notify it of the newly found damage and submit to a secondary investigation before it could recover benefits. Judge Robert N. Scola, Jr., of the United States District Court for the Southern District of Florida, disagreed, finding that the insurance policy did not require a supplemental claim.

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Important Decision for Hurricane Wilma Claims

The fact pattern is simple and quite common. An association suffered damages from Hurricane Wilma on October 24, 2005, and immediately notified its insurance carrier that the loss had occurred. The insurance carrier, in turn, retained an adjuster to investigate the loss and determine what was owed under the policy. After a brief inspection, the adjuster determines that the damages do not exceed the large hurricane deductible contained in the policy and denies payment.

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Some Condominium Boards Spark Flames By Seeking To Extinguish Smoking Within Their Communities

Smoking poses obvious fire risks and insurance costs to association and apartment communities. In addition to the fire risks, there are certain health risks to community residents, as well as increased complaints from non-smoking residents. With the aim to not only prevent fires and reduce health problems, but also to increase property values, some boards are seeking to prevent unit owners and their guests from lighting up in their communities. It seems they have heeded the warnings of that famous icon, Smokey the Bear, “Remember... Only YOU Can Prevent Forest Fires.”

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Florida Court Limits Condo Association's Claim to Actual Cash Value Since It Had Not Completed Repairs

When condominium associations suffer millions of dollars worth of catastrophic damage from a natural disaster, most associations will need to rely on insurance proceeds to start and complete repairs. Indeed, that is why they purchased insurance in the first place. Unfortunately for condominium associations in Florida without millions of dollars in reserves, recent legal opinions may not help when it comes time to make those repairs.

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The Concept Of "Custodial Contract" - Does It Make The Association Guardian Of Unit Owners' Repairs?

From time to time certain legal buzz words seem to jump off the page when reading court cases. “Custodial contract” is one of those interesting legal terms that I recently came across in an opinion from the U.S. Middle District of Florida. Upon first glance, it seems that the term must relate to the area of family law and guardianship or, more literally, to a contract for janitorial services. But law, in its infinite wisdom, has a way of transcending beyond the norm. Custodial is defined as “of or relating to the work of guarding or maintaining” and “marked by care and supervision.” The American Heritage Dictionary of the English Language, Fourth Edition. The concept of a contractual relationship arising out of the factual circumstances and actions pursued by the parties is an interesting one. The “custodial contract” concept as it relates to condominium association and unit owners is one with slim discussion in Florida legal precedent… until a recent case.

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The Incredible Shrinking Insurance Policy

A few years back, several journalists began reporting about a new trend in product packaging: offering less product for the same price. One of these journalists, Michael Brush, dubbed PepsiCo’s subtle repackaging as, “The incredible shrinking Doritos bag.” Most companies cited rising costs as the reason for reducing sizes, but when the result ends up being higher profits and larger market share, those motives could rightfully be challenged. According to Brush and Harvard Business School Professor John Gourville, this strategy works because consumers don’t react to a change in quantity like they do to a change in price. Unfortunately for insurance consumers, this trend is finding its way into the insurance industry.

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National Flood Insurance Program To Be Extended Again

Few coverages are more important than flood insurance. Whether it is storm surge from a hurricane, rising rivers, torrential rains, or broken levees, floods occur in every part of the United States. Unfortunately, as most people know, flood insurance is difficult to find. Since most private insurers specifically exclude flood from coverage, the majority of flood coverage is purchased from the National Flood Insurance Program, which is instituted and administrated by the federal government. Unfortunately this vital program has been short on funding for years, leaving many to wonder if the program can survive.

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It's All About the Property Interest, or Why Associations Aren't Normally Responsible for Damage to Individual Condominium Units

Is a condominium association responsible to repair casualty loss damage to the interior of individual condominium units? Generally the answer is no, but why not? After all, some state statutes like the Maryland Condominium Act require that the association repair or replace, “any portion of the condominium damaged or destroyed.” In the case of Anderson v. Council of Unit Owners of Gables on Tuckerman Condo., 948 A. 2d 11 (Md. App. 2008), the court took the opportunity to explain why not.

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Citizens Plans Large Rate Hike.....Again

While the holiday season usually brings good tidings and cheer, condominium associations and residents insured by Citizens Property Insurance Corporation can expect coal in their stockings this year. Once again, the state’s largest insurer plans to increase rates to Florida condominium residents between 19 and 20.6 percent on average leaving many dismayed, especially since it has been over 5 years since the last major hurricane.

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When is an Insurance Claim Ready for Litigation?

When asked if something is ripe, one might immediately think of fruit that is ready to eat. Similarly, the legal term “ripeness” means the readiness of a case for litigation. While a simple smell test may be all that is needed for fruit, the ripeness of a legal case, an insurance claim, and a legal case about an insurance claim, require a little more analysis.

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Florida Legislative Update: New Bad Faith Bill Filed

For the second straight term, a bill has been filed in the Florida Legislature designed to make changes to the well-settled legal principles that have successfully governed our state for many years and have held insurance carriers accountable when they act improperly.

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Keeping Halloween Parties within Association Rules

Halloween usually brings two things for sure: trick-or-treaters and Halloween parties. As a member of a condominium or homeowner’s association, you can almost be certain that either your association or one or more of your neighbors will be hosting a Halloween party. If you or someone you know is planning a party, try to make sure that the party doesn’t go so far as to violate any of the association’s rules, as one California homeowner’s party did in Jones Ranch Homeowners Ass'n v. Degnan, A118584, 2008 WL 5049757 (Cal. Ct. App., Nov. 25, 2008, A118584).

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Loss Assessment Coverage and the "Master Deductible" Clause

When a condominium association needs money for an association expense such as property repairs, the association can generally divide the cost among association members and charge a proportionate amount to each member through special assessments. Many condominium unit owner policies provide coverage for some of these assessments. In fact, Florida Statute § 627.714 (2011) requires that residential condominium unit owner insurance policies include at least $2,000 of property loss assessment coverage that kicks in when an association assesses members for property damage.

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Am I Personally Liable Simply For Being A Director?

I am always amazed at the willingness of some unit owners to run for a board of directors. I am even more impressed when they choose to do it for a second, third, or fourth time. Being a director is not easy. Undoubtedly, a faction of the association will disagree with the board and will make their opinions known. Sometimes this leads to contentious situations that can drive a wedge between friends and neighbors.

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Federal Middle District Court Of Florida Orders Nationwide To Produce Documents It Withheld Under The Attorney-Client Privilege And Work Product Protection

On September 12, 2011, in Customary Discovery Practices May Vary Greatly Between Federal And State Courts, I discussed how the Federal Middle District Court of Florida resolved a discovery dispute between Nationwide and Pepperwood of Naples Condominium Association. Recently, the Court decided another discovery dispute between the parties. This one involved Nationwide’s claim of attorney-client privilege and work product protection to some document requests. Such claims of privilege are common in litigation. The resolution of these disputes can play a very important role in the information that the policyholder can obtain to support its claims, especially in a bad faith case.

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Colorado Court Employs Grammatical Approach to Determine Man-Made Earth Movement Not Excluded Under Earth Movement Policy Provision

If asked what an ordinary person might select for casual reading, one might think of books, magazines, or newspapers, but probably not insurance policies. If an ordinary person were to read an insurance policy, what would he or she think it meant? In states that employ the “reasonable expectations doctrine” for insurance policies, courts are often faced with this question. Colorado is one of the states that considers the reasonable expectation of the insured when interpreting insurance policies, and a recent condominium case there took a grammatical approach to determine what an ordinary reader would have understood the condominium policy to have covered.

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Boat Slip Owners Accuse Florida Condominium Association Of Leaving Them High And Dry By Not Insuring The Docks And Marina Before Hurricane Irene In 1999

In a recent case, the Florida's Third District Court of Appeals resolved a decade old controversy related to boat slips of a condominium association damaged by Hurricane Irene in 1999. The Court noted that the dispute had been ongoing for such a large amount of time that the National Weather Service re-circulated the name Irene, which just recently affected many people along the East Coast of the United States.

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Whose Responsibility Is It To Find The Source Of An Unknown Water Intrusion?

The modern day condominium involves a unique combination of real property rights between the condominium association and individual unit owners. The property interests are separate but related and can lead to some interesting questions regarding the rights and responsibilities of the parties that own each particular interest.

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Associations Should Review Restoration Contracts Carefully

After damage has occurred, the claims process often takes more time than expected. Unfortunately, while this is not always avoidable, delay in reconstruction can cause further losses in rent and keep people out of their homes for longer than necessary.

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Customary Discovery Practices May Vary Greatly Between Federal And State Courts

"Custom in law is the established pattern of behavior that can be objectively verified within a particular social setting.” Wikipedia. Recently, the Federal Middle District Court in Florida decided a discovery dispute between a condominium association and its insurer, Nationwide, in the case Pepperwood of Naples Condo. Ass’n., Inc. v. Nationwide Mut. Fire Ins. Co., No. 2:10-cv-753, 2011 WL 3841557 (M.D. Fla. August 28, 2011). Discovery disputes arise when one party asks another to produce information, but the other party coes not comply. It is common for insurers to refuse to produce claim file materials, claiming the documents are protected by certain privileges and citing other objections. The Pepperwood case involved a situation where the condominium association sued Nationwide for bad faith damages for not promptly paying all insurance proceeds from the 2004 hurricane damages and forcing it to incur additional expenses in the claim presentation through an appraisal process.

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More Confusion of Florida's Statute of Limitations for Property Insurance Claims

On May 17 of this year, Florida Governor Rick Scott signed into law Senate Bill 408, which, among other things, shortened the statute of limitations for property insurance claims in Florida to five years from the date of the loss. Under the earlier Florida Statutes § 95.11 and § 95.031, the statute of limitations did not expire until five years after a property insurer had breached the insurance policy. The Senate Bill 408 change came roughly five and a half years after Hurricane Wilma destroyed an enormous amount of Florida property, and the change left many questioning whether they could still seek redress for these claims.

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The Devil Is In The Details And Everything In First-Party Property Insurance Is A Detail

With so many recent disastrous events taking place across the United States it is important for associations, businesses and all policyholders to understand that in a property insurance claim, the devil is in the details. Hearing generalizations from insurance professionals about what may be covered and what may be excluded is not nearly enough when putting together a damage claim. The detail work is in the particular facts, documentation of the event and damage, and sometimes most importantly, the language of the policy at issue.

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Even with a Narrow Pollution Exclusion Limitation, California Court Denies Condominium Association's Property Claim for Asbestos Cleanup

Pollution exclusions in insurance policies are typically complex provisions that require a significant amount of legal analysis to apply correctly. Over the years, the body of law interpreting these exclusions has evolved into what is now a fairly narrow interpretation of what is and is not “pollution” under these exclusions. For example, in the case of MacKinnon v. Truck Ins. Exch., 73 P. 3d 1205 (Cal. 2003), the California Supreme Court limited a pollution exclusion in a commercial general liability (CGL) policy, holding that the exclusion only applied to “injuries arising from events commonly thought of as pollution, i.e., environmental pollution.”

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Update On Bad Faith Case Against Citizens Property Insurance Corporation That Was Allowed To Proceed

The issue of whether Florida’s legislative-created insurer, Citizens Property Insurance Corporation, is, or should be, subject to damages for bad faith claims handling practices has been heavily debated by industry professionals during the last several years. Debbie Moroy, of ClaimSmentor, recently posted a comment to request an update on the Citizens Property Insurance Corporation v. San Perdido Association, Inc. case. In my Property Insurance coverage Law Blog post from October 18, 2010, titled Bad Faith Lawsuit Allowed to Proceed to Trial Against Citizens Property Insurance Corporation, I discussed an interesting turn of events on this issue. At that time, the First District Court of Appeal rejected Citizens’ request to stop a bad faith action against it from proceeding in the trial court.

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Policyholders Should Know About Ensuing Loss Provisions

“All Risk” policies generally contain a plethora of exclusions that limit or bar coverage for many types of damage. For instance, if a loss is caused by wear and tear, deterioration or improper installation, many policies will specifically exclude payment. Fortunately for some, many commercial and residential insurance policies contain ensuing loss clauses that may afford coverage for damages resulting from one of these perils.

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Associations Need to Provide the Services they Advertise

Breaking and entering is never a laughing matter, but that didn’t stop TMZ from making Goldilocks and Marie Antoinette jokes after a NFL player found an intruder sleeping in his bed and eating his cake in his Miami Beach condominium.

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Court Analyzes Whether A Statute of Limitations Issue is Ripe

Last week in Can Insurers, Through Written Statements, Waive A Statute Of Limitations Defense?, I wrote about how Florida’s five-year statute of limitations applicable to the 2004 and 2005 hurricanes can be difficult to determine because it begins on the date an insurer breaches an insurance contract. Last week’s post discussed how the U.S. District Court for the Middle District of Florida held that the statute of limitations defense can be waived by insurers through written statements. The Southern District recently analyzed whether a claim for declaratory relief related to a statute of limitations issue in a Hurricane Wilma case was ripe for determination.

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The Residential Only Restriction In Condominium Association Documents And Unit Owners Telecommuting From Their Units

Telecommuting is a work arrangement in which employees enjoy flexibility in working location and hours. For them, the daily commute to a central place of work is replaced by cyber communication links. According to Wikipedia, estimates suggest that over fifty million U.S. workers (about 40% of the working population) could work from home at least part of the time. Some may work from home occasionally, while others may establish a home-based business. For many, homes are the most convenient and cost-effective workplace, particularly in this economic crisis. Homeowners in condominium associations may be subject to restrictions—or potentially even a total ban—on business use of their homes if the association has a residential restriction in its governing documents that prohibits the use of residential units for commercial purposes.

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The Importance Of Disaster Response Plans For Associations Cannot Be Downplayed

One of the best defenses against natural disasters is to have a disaster plan in place. Depending on where your association is in the United States, there are numerous disasters, such as earthquakes, wild fires, tornados, floods, and hurricanes that residents potentially face. Emergency planning has become an essential skill for association managers, who should understand what types of disasters are likely to occur, develop disaster response plans, practice them, and discuss them with the residents.

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Changes In The Law Can Lead To Confusion

With the passage of Senate Bill 408, (Chapter Law 11-39), many have asked how the new laws will affect their current insurance claims. While sweeping changes are rarely passed, even a small change in a law can determine the outcome of a claim.

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Condominium Association Directors in Florida Can Seek Indemnification for Actions Brought Against Them by the Association Itself

Condominium association directors generally owe a fiduciary duty to the association they serve. As a fiduciary, a director owes grave duties of loyalty and good faith to the association. This relationship is one of trust that finds its roots in contract, statute, and the common law. While directors owe this high duty of care to the association, under the right circumstances, a director may seek to have the association cover any liability or expense incurred to defend the director against accusations of wrongdoing. This is the principle of indemnity.

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Was A Policyholder Release Intended As A Final Settlement Of An Association's Wilma Claim? - Court Will Determine Whether Mutual or Unilateral Mistake

The Southern District Court of Florida will have to determine whether an insurance company appropriately obtained a policy release from a condominium association involving a Hurricane Wilma claim in a case that is pending before it. Continuum Condominium Assoc., Inc. v. Mt. Hawley Ins. Co., No. 10-23550, 2011 WL 2214810 (S.D. Fla. June 2, 2011). It can be a questionable practice for insurers to demand that their policyholders sign a release during the adjustment of a claim before obtaining insurance benefits, particularly when the policyholder is not represented by counsel. The court’s analysis may balance public policy in favor of releases, which encourage parties to resolve their disputes, with the potential over-reaching or inappropriate means with which this release was obtained.

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What Is The Role of An Appraiser?

If an association is unhappy with its insurer’s offer to settle a claim, it has two main avenues to resolve the dispute. First, the association can retain an attorney and file suit against the carrier for breach of contract. Second, the association can invoke the appraisal process afforded by most insurance policies.

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Condominium Developers May Be Liable to Condominium Associations for Insurance Benefits

When a new condominium is constructed, the developer initially owns the property. Typically the developer will start selling individual condominium units, but maintain ownership and control over the common elements and unsold individual units. At some point, usually after a majority of the individual units have been sold, the developer will turn over ownership and control of the common elements to an association of individual condominium unit owners. These are usually times of transition, and different parties at different times carry different interests in the property. When an insured loss occurs during these transitory times, complicated issues can arise regarding who is entitled to insurance benefits.

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Can Your Association Recover Public Adjuster Fees From An Insurer?

It is no secret that association board members, for the most part, have no formal training in dealing with insurance issues. In fact, neither do most association managers. While an association or manager can deal with a small claim without help, claims involving widespread damage or confusing policy issues often require outside help.

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Recent Case Holds That Condominium Association Could Owe A Duty of Care to Unit Owners to Maintain Pipes In the Interior Boundary Walls of Units

In a recent case, the Florida Fourth District Court of Appeal analyzed a condominium association’s declaration documents to determine whether the association owed a duty to maintain the pipes located within interior walls of the condominium. While the subject of the case is a negligence action by the unit owner against the association, the case involves analyses into governing documents and statutory construction similar to those often required in the first-party property insurance context in claims by unit owners in condominium associations.

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Hurricane Season Coincides With Important Notice Changes In Florida

As most of us know, June 1 was the beginning of the Atlantic Hurricane Season. Experts are again predicting a “highly active” year, and some opine that more than ten major hurricanes are possible. Coincidently, June 1 also came with significant changes to the laws regarding property insurance in Florida. As Jeremy Tyler mentioned on Monday, even the statute of limitations for filing a property damage lawsuit has been changed to five years from the date of the storm.

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New Changes to Florida Property Insurance Statute of Limitations

A statute of limitations serves to restrict access to the courts after a specified amount of time has passed. The reasons for such are many, but the underlying principle is simply that if you wait too long, you give up the opportunity to resolve your issue with the courts. The statute of limitations is created by the legislature, but the parties to a contract can also agree to limit the time to bring an action before a court of law. When this happens, a question often arises as to which controls, the statute or the contract.

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Associations Should Be On High Alert For Fires This Memorial Day Weekend

When I hear about wildfires, I automatically think of California and the large fires that have destroyed millions of acres of forests and property in the past years. While not usually as publicized, wildfires threaten almost every portion of the United States and pose a significant risk to life and property alike.

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The Importance Of Timely Disclosing Expert Reports

The Southern District Court in Florida recently issued an unreported opinion involving a discovery dispute between the parties where the insurer sought to have the condominium association’s expert reports stricken from consideration at trial because they were not timely disclosed. The ruling focused on disclosure requirements found in the Federal Rules of Civil Procedure. The crux of the condominium association’s case was potentially at stake in this dispute.

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Alabama Tornado Claims Hits Sixty-Five Thousand

The devastating tornados that ripped through portions of southeast this month have already led to over sixty thousand claims filed in Alabama alone. While many automatically think of condominium associations as the high-rise vacation destinations along the Gulf Coats, many condominium associations and HOA’s are located throughout the states. In Alabama, some of the worst hit areas around Birmingham and Tuscaloosa have some of the highest concentrations of condominiums in the state.

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Must an Insured "Sit" for an EUO Before Filing Suit if It Has Been Requested?

A standard clause in most property insurance policies requires an insured to sit for an examination under oath (EUO) if the insurance company requests one during the claims process. This clause is often listed as one of the insured’s duties after loss. A separate clause, sometimes entitled “Suit Against Us,” may also require that the insured comply with its post-loss duties before suit may be filed against the insurer. The question of whether an insured condominium association complied with its duty to sit for an EUO before filing suit was one of the issues discussed in the case of El-Ad Enclave at Miramar Condo. Ass'n, Inc. v. Mt. Hawley Ins. Co., 752 F. Supp. 2d 1282 (S.D. Fla. 2010).

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Associations Should Begin Checking And Understanding Their Policies Now

With the Atlantic Hurricane Season rapidly approaching, associations should be checking with their agents and brokers to make sure that their property policies are in place and that all terms and conditions are understood. This includes the typical policies that provide coverage for events such as wind and fire, as well as flood insurance policies mostly issued by the National Flood Insurance Program.

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Insurers' In Florida Are Obligated To Notify Policyholders Of Their Right To Participate In Florida Mediation Program

In Florida, The Department of Financial Services manages a non-binding mediation process that permits policyholders to challenge claims decisions reached by Florida insurers. Florida Statute §627.7015 codifies the mediation process, which applies to condominium association and residential claims in Florida. The purpose of the statute is to use the mediation process to encourage an inexpensive and speedy resolution of insurance claims prior to commencing litigation. Under the statute, insurers in Florida are required to notify all first-party claimants of their right to participate in the mediation program “[a]t the time a first-party claim within the scope of this section is filed.” Florida Statute §627.7015(2).

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Condominium Associations May be Liable for Failing to Resolve Unit Owner Disputes

A recent lawsuit filed in Baltimore, Maryland, by one condominium unit owner against a neighboring unit owner and her condominium association illustrates potential liability for condominium associations in unit owner disputes.

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Memorializing Agreements Is Important In Subsequent Disputes

Many associations know the complexity of a large insurance claim all too well. Whether it is a fire, hurricane, earthquake, or water leak, dealing with adjusters, tenants, and other board members can be difficult and confusing at times. In most cases, best practices dictate that a single director should be appointed to “head up” the insurance claim effort. While the whole board should make decisions together, having a single individual as the contact person for the insurance company and/or its adjusters can relieve stress and avoid confusion.

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Would You Believe Some Insurance Company Representatives Do Not Understand The Parties' Burdens Under An All-Risk Policy?

Burdens of proof are always an important thing to understand in conducting an appropriate legal analysis, particularly as they relate to a coverage analysis in first-party property insurance claims. Shockingly, I have seen insurance company representatives who, when evaluating an insurance claim for coverage, do not fully understand the analysis under an all-risk policy form. This confusion can lead to litigation that may otherwise be unnecessary and can actually cause the insurance company additional costs above the amount of the claim.

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Florida Supreme Court Addresses Conditions for Bad Faith Actions

As I have discussed in the past, some insurers attempt to avoid bad faith actions by arguing that the current law requires a judicial determination that the insurer breached the contract as a prerequisite to liability. Simply by participating in the appraisal process, these carriers believe that they somehow have immunity for any previous actions that delayed a claim.

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Prepare Your Case In Advance to Avoid an Early Dismissal

Late last year, the Garden-Aire Village South Condominium Association filed a declaratory judgment action against its insurance company, QBE Insurance Corporation, seeking a declaration from the Court as to its rights on its Hurricane Wilma loss. The condominium association’s lawsuit included three counts:

  1. Seeking a declaration that glass windows and sliding glass doors were covered under the association’s master insurance policy;
  2. Seeking a declaration that the association was entitled to have its Hurricane Wilma loss appraised under the policy;
  3. Seeking a declaration that the windstorm deductible in the association’s master insurance policy was void because of deficiencies in font requirements of the deductible notice.
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Recent Ruling That There Is No Common Law Fiduciary Duty Between An Insurer And A Policyholder In A First-Party Claim In Florida

In a recent opinion, a federal trial court reviewing Florida law ruled on the issue of whether a Complaint involving a condominium association stated a claim against insurers for breach of a fiduciary duty in adjusting a first-party claim for damages. Grandrimo v. Parkcrest Harbour Island Condo. Assoc., Inc., No. 10-964, 2011 WL 550579 (M.D. Fla. February 9, 2011). The claim involved significant water damage, requiring extensive repairs forcing the Plaintiff, a unit owner within the condominium association, to stay in a hotel. The Plaintiff filed suit against the condominium association and numerous insurer Defendants asserting, among other things, that the insurers breached a fiduciary duty in the handling of the claim.

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New Bills Before the Florida Legislature Could Change Florida Condominium Insurance Law

A new legislative season is upon us in Florida. This usually means big changes to Florida condominium law and Florida condominium insurance law. Some of 2010’s big legislative changes to condominium insurance in Florida can be found in my posts from last June, New Changes to Condominium Insurance Legislation and More on New Changes to Condominium Insurance Legislation.

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A Public Records Request May Help Support Your Claim

Previously, in Documentation of Prior Repairs Can Be Important, I wrote about the importance of keeping relevant information such as receipts and pictures from prior maintenance and repairs to support a future insurance claim. Aside from the work that your association does, another important source of information is your insurer’s underwriting and claims files. While most for-profit insurers will not easily part with these files, if you are insured by Citizens Property Insurance Corporation, you have a right to these files as a matter of law.

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The Game Of Cat And Mouse With Insurers In Florida Asserting That Their Claim File Materials Are Completely Protected From Disclosure

During litigation in Florida first-party property insurance disputes, insurers often withhold their entire claims files from discovery by relying the work product doctrine. The claim file contains reports, estimates, photos and other information that is pertinent to the issues in a coverage dispute between a policyholder and its insurer. Insurers attempt to shield the entirety of the claim file from production in discovery where there should be disclosure between the parties. On the flip side, insurers often litigate issues regarding whether policyholders fully complied with their requests for documents and information in compliance with the policy of insurance. It would seem fair and logical that such disclosure would be a two way street, but insurers assert that it is definitely a one way street. When an insurer claims privilege to its entire claim file, the policyholder has no choice but to litigate that issue to obtain any information.

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Litigating the Right to Resolve Disputes Without Litigation

Last week on the Property Insurance Coverage Law blog, I wrote about new appeals that had been filed in Florida’s Third District Court of Appeal in Miami regarding insurance appraisals. Since November of 2010, three new cases regarding appraisal had come out of the Third District: Citizens Prop. Ins. Corp. v. Galeria Villas Condo. Ass’n, Inc., 48 So. 3d 188 (Fla. 3d DCA 2010), Citizens Prop. Ins. Corp. v. Maytin, No. 3D10-693, 36 Fla. L. Weekly D51 (Fla. 3d DCA Dec. 29, 2010), and Citizens Prop. Ins. Corp. v. Mango Hill Condo. Ass’n 12, Inc., No. 3D10-2014, 2011 WL 613518 (Fla. 3d DCA Feb. 9, 2011). As of last week’s blog post, four new appeals had been filed by Citizens, which makes a total of seven (7) appraisal appeals filed by Citizens in the Third District alone.

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The Obligation Of Good Faith And Fair Dealing

Every disagreement between a policyholder and its insurer is not necessarily due to bad faith on the insurer’s part. Many claims are settled promptly, fully, and fairly. That said, there are also instances where an insurer and its adjusters and representatives do not adjust and settle a claim with the policyholder’s best interests at heart. This is when bad faith allegations come into play.

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Associations Should Review Their Policies To See If Their Insurers Have Made Them Responsible For A Share Of The Risk Of Loss - This Is Known As Coinsurance

Coinsurance is a provision in the insurance industry which allows an insurance company and its policyholder to potentially apportion between them any loss covered by the policy. This is usually according to a fixed percentage of the value for which the property is insured. In property insurance policies, the coinsurance clause provides that property must be insured for a specific percentage, usually 80% to 100% of its value. This means that the insurance company can shift part of the risk of loss back to the policyholder if the property is not insured to a certain ratio of the value of the property at the time of a loss. If the value of the property times the coinsurance percentage is greater than the limit of insurance for the property, then the insurer may apply a coinsurance “penalty” and may not pay the full value of that loss. Associations and all policyholders should periodically review their policies to determine if they are subject to a coinsurance percentage and to ensure that they are adequately insured for the value of their property according to any coinsurance percentage. This “penalty” can be huge for associations suffering a large loss in the event of a large catastrophe like a hurricane.

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The Penny Gets a Rare Moment in the Spotlight

Last week on the Property Insurance Coverage Law Blog, I wrote about removal of lawsuits from state to federal court. The possibility that an insurance carrier defendant will remove a lawsuit filed by a condominium association is much greater than that for the average homeowner. One reason is because many condominium associations get insurance from out of state carriers, and another is because property losses to a condominium association will typically be larger than that of the average homeowner.

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Recent Third District Court of Appeals Ruling on Appraisal

Just last week, the Third District Court of Appeals issued another ruling involving entitlement to appraisal in Citizens Property Insurance Corp., v. Mango Hill Condo. Association 12, Inc., No. 3D10-2014 (Fla. 3d DCA February 9, 2011). The Third District has been busy the last couple of months with rulings on the issue of appraisal, and one carrier in particular seems to be filing many of the appeals. I wanted to introduce the recent ruling, and there will likely be some follow up discussion in the weeks to come.

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Documentation of Prior Repairs Can Be Important

Most condominium associations are constantly working on their buildings and property. General maintenance, landscaping, cleaning, and minor repairs are among some of the most time consuming daily tasks. While these repairs may seem minor to many, thoroughly documenting major repairs can be very important during a subsequent insurance claim.

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Clerical Errors in Insurance Policies Can Raise Complex Issues in Litigation

In my last condominium blog post, I discussed a recent case from Florida in which a condominium unit owner sued a condominium association for allegedly failing to maintain and repair the condominium roof, which resulted in damage to the unit owner’s property. The United States Court of Appeals for the Fifth Circuit recently published an opinion on a similar case out of Louisiana, in which a condominium unit owner sued a condominium association for failure to procure adequate flood insurance and failure to pursue an insurance claim on the unit owner’s behalf.

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Is There An Agreed Upon Definition For The Term "Fixtures"?

Continuing from my January 3, 2011, blog,Florida Southern District Grants Summary Judgment Against QBE Finding Coverage For Association’s Windows And Sliding Doors Damaged By Hurricane Wilma, QBE disagreed with the association’s interpretation of the term “fixtures” in the case, Royal Bahamian Association, Inc. v. QBE Insurance Corporation, No. 10-21511 (S.D. Fla. October 28, 2010).

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What Type of Policy Do You Have And Why Does It Matter?

In the world of property insurance, there are two main types of policies, “all-risks” and “named perils”. Which type an association or unit owner has can have a large effect not only on the coverages provided but also the burdens that must be met to prove your claim in subsequent litigation. Therefore, it is important for all policyholders to be familiar with their policy before a loss occurs.

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Property Damage Claims Can Also Implicate Liability Insurance Issues

Most property insurance claims only involve two parties, the insured and the insurer. Sometimes, however, property claims can get more complicated and involve third parties, implicating liability insurance policies. This is exactly what happened in Eastpointe Condo. I Ass'n, Inc. v. Travelers Cas. & Sur. Co. of America, 379 Fed. Appx. 906 (11th Cir. 2010).

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Association Held Responsible For Repairs To Interconnected System Of Pipes Viewed As Common Property

The question of insurer responsibility for damages from a pipe break in a condominium association is a common question. Often times, the individual unit owner has an insurance policy providing coverage for portions of the interior of that unit, while the association has a master policy providing coverage for association property pursuant to the condominium declarations and certain state statutes. In a recent California case, Dover Village Association v. Jennison, (Cal. Ct. App. December 21, 2010), an individual unit owner had a leaky sewer pipe two feet beneath the concrete slab of his Newport Beach condo. The association said he was responsible for the repair bill on the theory that the sewer pipe was “exclusive use common area” for which he was responsible. The trial court entered a judgment declaring that the association should bear the expense of the repair cost, and awarded that unit owner damages, attorney’s fees and court costs. The association appealed that judgment.

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Association's Right of Entry: When Can an Association Enter a Unit Without Permission?

Anyone who has submitted an insurance claim knows that the investigation can be lengthy. For a condominium association, the investigation can be much more troublesome. Not only must the association investigate potential damage, but the insurance company and its adjusters and consultants will undoubtedly want access as well.

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"The Rest of the Story" on a Premature Lawsuit Against a Condominium Association

Last week I received a comment on my last blog post “Attorney's Fees Awarded in Lawsuit Filed Prematurely Against Condominium Association.” The comment was from Erwin Rosenberg, who was counsel for the appellee in the case of Point East Four Condo. Corp., Inc. v. Zevuloni & Assoc., Inc., No. 4D09-3221, 2010 WL 4962853 (Fla. 4th DCA Dec. 8, 2010). Mr. Rosenberg offered a firsthand account of his side of the case, which isn’t readily available from reading the opinion published by the Fourth District. In its opinion, the Fourth District awarded attorneys fees to a condominium association after it found that a public adjuster had sued for its fee prematurely.

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Florida Southern District Grants Summary Judgment Against QBE, Finding Coverage For Association's Windows And Sliding Doors Damaged By Hurricane Wilma

The Southern District Court of Florida entered summary judgment in favor of the Royal Bahamian Condominium Association and found coverage for the windows and sliding doors damaged during Hurricane Wilma in 2005. Royal Bahamian Association, Inc. v. QBE Insurance Corporation, No. 10-21511 (S.D. Fla. October 28, 2010). It is an important ruling, since a majority of the damage claimed by the association from Hurricane Wilma was to the windows and sliding doors. QBE took the position that the windows and doors were not covered because those items are the individual unit owners’ responsibility to maintain under the condominium declarations. The association board members operated under the mistaken belief for several years after the loss that the unit owners were responsible for repairing and replacing the windows and doors damaged during the hurricane. The board sent out notices advising the unit owners of its interpretation of the condominium declarations and quoting the pertinent sections of the declarations related to unit owner responsibility to maintain the windows and doors. Once the association retained counsel and a team of experts experienced in first-party property insurance, it submitted a Proof of Loss to QBE for over $8 million in damages caused by Hurricane Wilma in 2009.

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Attorney's Fees Awarded in Lawsuit Filed Prematurely Against Condominium Association

Recently, the Florida Fourth District Court of Appeal reversed a trial court decision that denied attorney’s fees for a condominium association after it was successful in getting a suit against it dismissed. In Point East Four Condo. Corp., Inc. v. Zevuloni & Assoc., Inc., No. 4D09-3221, 2010 WL 4962853 (Fla. 4th DCA Dec. 8, 2010), a condominium association signed a contract with a public adjuster to handle its claim under an insurance policy. The contract provided that 10% of the amount recovered would be payable to the public adjuster. The contract also provided that the prevailing party in “any action” would be entitled to attorney’s fees, payable by the losing party.

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Having a Long-Range Reserve Plan is an Important Part of an Association's Budget

It is very important for homeowner and condominium associations to have budgets with adequate reserves for necessary maintenance repairs to association property. Association board members and property managers may be interested in the Association of Professional Reserve Analysts (“APRA”). APRA is a non-profit corporation established to maintain an understanding of reserve planning and increase awareness in this field. APRA maintains a bimonthly publication with various articles of interest that contain beneficial information for board members and property managers involved in the budgeting of their associations.

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Policy Changes Through Endorsements Are Not Always Valid

It is no secret in the insurance industry that the widespread damage caused by Hurricane Andrew, Hurricane Hugo, and the Northridge Earthquake changed the way insurers do business. While the claims handling process was forever changed by the internal programs instituted by large insurers like State Farm, Allstate, and Farmers, many companies also began to re-think the coverages. Meaningful mold coverage has all but disappeared, the definition of what constitutes a collapse has been significantly changed, and strict co-insurance provisions and large hurricane and earthquake deductibles are becoming more and more common.

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The Aldridge-Benge Firefighter Safety Act Aims to Keep Firefighters Safe

Chip Merlin recently authored several blog articles on the increased risks of fires this time of year. In Thanksgiving Day is the Number One Fire Insurance Claim Day and A Touching Thanksgiving Day Fire Follow-up, he discussed the increased risks of kitchen fires, and in Christmas Trees Don’t Cause Fire Insurance Claims, he gave tips for avoiding fires with Christmas trees. As important as it is for each of us to recognize these risks for our own residences, that importance is multiplied for condominium associations and owners of other multiunit residential properties.

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Condominium Association Found Liable For Sewer Back-up Damage Inside Unit

A recent California case, Affan v. Portofino Cove Homeowners Association, Inc., No. G041379, (Cal. App. 4th October 29, 2010), involves an interesting issue of liability for resulting damage and contamination to the interior of a condominium unit related to a sewage back-up from the association common area plumbing.

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BP To Pay Over $37 Million To Alabama Condominium

More than six months after the Deepwater Horizon explosion and ensuing oil spill, many on the Gulf Coast are still waiting for payment from BP and the Gulf Coast Claims Facility run by “Oil Spill Czar” Ken Feinberg.

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Condominiums Need to Cooperate with Insurer Requests Before Demanding Appraisal

The day before Thanksgiving last week, the Florida Third District Court of Appeal issued a non-final opinion in the case of Citizens Property Ins. Corp. v. Galeria Villas Condo. Ass’n, No. 3D10-807, 2010 WL 4740049 (Fla. 3d DCA Nov. 24, 2010).

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Some Property Managers Split Commissions with Insurance Agents when Placing an Association's Insurance

Two of Florida’s largest property management companies disagree over whether commission splitting with the association’s insurance agent is a conflict. Some property managers feel that commission splitting is fine and actually induces competitive pricing on insurance quotes for their associations. For example, if the property manager is intricately involved in the association’s efforts to obtain the insurance quotes, then the manager may be able to induce the association’s current insurance agent to match bids from competitors looking to write the policy. Property managers familiar with the association can provide competitive information to the agencies in this regard. Annual commissions on association policies can be tens of thousands of dollars, and, as an incentive for the placement, they are often split with the agents in this type of arrangement.

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More on Condominium Insurance Exclusions

A few weeks ago, in my post, David Thompson’s Dirty Dozen Condo Insurance Exclusions, I wrote about property elements that were excluded from the master condominium policy under Fla. Stat. § 718.111(11)(f). I left that post a little open-ended by not nailing down how specific property items that are not expressly excluded in the statute would be treated, and I received a few questions following that post. To recap, Fla. Stat. § 718.111(11)(f)3 excludes from a master condominium insurance policy: (1) “personal property”, (2) a list of specific items such as floor coverings and electrical appliances, and (3) items that are “located within the boundaries of the unit and serve only such unit.”

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Florida Ethical Concerns Surrounding Insurance Settlement Agreements

In Can a Condo Association Get Out of an Insurance Settlement Agreement? Jeremy Tyler discussed a recent California case involving a homeowner association’s challenge of an insurance settlement agreement. He provided an analysis into the factors an association would need to consider when attempting to challenge an insurance settlement agreement. Challenging such a settlement, even if based upon fraudulent inducement, can be a difficult decision for an association to make since, as Jeremy discussed, they may have to return the payment they did receive from the insurer. The facts in the case of Village Northridge Homeowners Ass’n v. State Farm Fire and Cas. Co., 237 P.3d 598 (Cal. 2010), where the policyholder alleged that the insurance company represented that the policy provided only $4.9 million worth of coverage when it in fact it provided $11.9 million, is very problematic and troubling.

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Consumer Complaints Grow As A Result Of Colorado Hail Storm

In 2009 and 2010, areas of Colorado took a beating from strong hail storms. Through contacts with adjusters, appraisers, and contractors alike, I have heard numerous stories about improper claims handling and appraisal tactics of many insurers over the past year. It appears that the state of Colorado has heard these same complaints as well.

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Must All Coverage Disputes Be Resolved Prior to a Court Order for Appraisal?

Last week, the Florida Fourth District Court of Appeal issued its ruling in Citizens Property Ins. Corp. v. Michigan Condo. Ass'n, No. 4D10-1794, 2010 WL 4226281 (Fla. 4th DCA Oct. 27, 2010). Michigan Condo. involved a condominium association that suffered damage to its property from Hurricane Wilma. The association timely notified its insurance company, Citizens, which investigated and estimated the amount of hurricane damage to be below the association’s insurance deductible. The association relied upon Citizens’ estimation, but later realized that damages were, in fact, in excess of the deductible, and reopened the claim. After Citizens had spent close to a year investigating the claim with no coverage decision, the association filed a Petition to Compel Appraisal in circuit court, based on the appraisal provision in the insurance policy. Citizens, in turn, denied coverage for the claim. Because there was a dispute in the amount of damage, with Citizens estimating the damage below the deductible and the association estimating the damage above the deductible, the circuit court ordered appraisal, and Citizens appealed.

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Associations Should Choose Examination Under Oath Representatives Carefully

While working on a condominium’s Hurricane Wilma claim this week, I had the opportunity to discuss numerous aspects of insurance adjusting with two adjusters who have more than 40 years combined experience working only for insurance carriers. Thankfully, these individuals have seen the light and now work for policyholders, but their insight into the claims process is invaluable.

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Residents Of A Florida Condominium Association Were Given A Week To Move Out Of The Building By The City After It Was Rendered Unsafe

The City of Bradenton, Florida, sent a letter to all thirty-six units of a condominium building, stating that the six year old building had been found unsafe by the city fire marshal. The city ordered the residents to move out within seven days. To paraphrase one of the residents living in the building; imagine coming home to your condominium thinking about your evening or the weekend ahead, and then finding out that you only have seven days to move out and find a place to live.

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Can a Condo Association Get Out of an Insurance Settlement Agreement?

What happens when a condominium or homeowners association enters into a settlement agreement with an insurance company and later finds out that the settlement was not enough or was fraudulently induced? That is exactly what happened in California in the case of Village Northridge Homeowners Ass’n v. State Farm Fire and Cas. Co., 237 P.3d 598 (Cal. 2010).

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Citizens Policyholders May See Rates Increase In 2011

Although Florida has not seen a major hurricane touch its shores since Hurricane Wilma in 2005, Citizens Property Insurance Corporation may be raising rates on many of its policyholders. Earlier this month, Insurance Commissioner Kevin McCarty approved additional rate increases that will affect thousands of insureds, including many condominium associations.

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Florida Appellate Court's Recent Ruling Involving Insurer's Late Notice of "Supplemental" Claim Defense

Recently, the Third District Court of Appeals issued an opinion reversing a summary judgment that had been entered in favor of an insurer in a case involving a condominium association’s hurricane damage claim. I wanted to write about the case because it is an interesting ruling related to the topic of an insurer’s late notice of a “supplemental” claim defense, which is a topic that Jeremy Tyler and I have written about previously.

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David Thompson's Dirty Dozen Condo Insurance Exclusions

A few weeks back, David Thompson, with the Florida Association of Insurance Agents (FAIA), wrote on the FAIA web site about “The Dirty Dozen” condominium insurance exclusions. Anyone who has access to the FAIA web site should definitely give it a read.

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Time Is Of The Essence For Associations

The story goes like this: A condominium association in South Florida incurred damage during Hurricane Wilma. The association called its insurer, which sent an insurance adjuster to inspect the damage.  The adjuster determined that the damages were below the deductible. The association's board of directors considered re-opening the claim while there is still time. Based on unit owner complaint, the Board recently discussed hiring insurance professionals to determine whether the condominium sustained more extensive damage than that found by the insurance company’s investigation. Unit owners within the association have expressed their feelings that it is imperative to conduct this investigation before it is too late. The unit owners have even threatened to sue the board for its inaction if the appropriate steps are not taken.

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Condominium Unit Owner May Not Deny The Association Reasonable Access To Their Unit To Repair Common Element

The question of whether a condominium unit owner must provide his or her association access to the interior of their unit to perform repairs or maintenance to common elements was recently addressed in a Florida appellate court opinion, Hollywood Towers Condo. Assoc., Inc. v. Hampton, 35 Fla. L. Weekly D1424a, 2010 WL 2509178 (Fla. 4th DCA June 23, 2010). Hollywood Towers, a Florida condominium association, became concerned with the structural integrity of the concrete balconies on each unit, so it hired experts to inspect each balcony. The balconies are common elements under the association’s declaration documents and are the responsibility of the association to maintain. The expert discovered that Ms. Hampton’s balcony, among many others, had suffered corrosion requiring repair. The expert concluded that demolition and repair work should be done from the inside of Ms. Hampton’s unit to remove the appropriate amount of concrete and rebar four inches past where the corrosion stopped. The association determined that it would install a temporary dust wall to Ms. Hampton’s unit, to separate the work area from the rest of the unit.

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Liability on the Insurance Agent

A few weeks ago, Corey Harris and I briefly wrote about liability that can fall back on the insured in our respective posts, Errors in Insurance Application May Leave You with No Coverage and More on Errors in Insurance Applications. This week, presents a situation in which liability may fall back on the insurance agent. Similar to the situations mentioned the posts above, an insurance agent may be liable for errors in an insurance application, for giving improper insurance advice, or negligently failing to procure insurance for a customer. The laws vary from state to state, but generally insurance agents owe a duty to their customers, that, if breached, could make an insurance agent liable for resulting harm.

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Arbitration for Certain Disputes Between Unit Owners and Condominium Associations Is Not Mandatory

I wanted to continue a discussion that Jeremy Tyler initiated last week in his blog post, Mandatory Arbitration for Disputes Between Unit Owners and Condominium Associations. Jeremy introduced a recent case, Gomez v. Lakes of Carriage Hills Condo. Assoc., Inc., --- So. 3d ---, 35 Fla. L. Weekly D1822 (4th DCA August 11, 2010), which concerned the question of whether claims brought by unit owners against the association and various members of its board of directors must first be pursued through non-binding arbitration.  Jeremy's post also presented an excellent analysis of certain “disputes” that by Florida Statute §718.1255 must first be submitted to non-binding arbitration before a lawsuit may be filed.

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Mandatory Arbitration for Disputes Between Unit Owners and Condominium Associations

What happens when condominium unit owners disagree with their condominium association? According to Fla. Stat. § 718.1255(4)(a), disputes between unit owners and associations must first be submitted to non-binding arbitration before a lawsuit may be filed. That does not mean that all issues between unit owners and associations must first go through arbitration. Only “disputes” require arbitration before a lawsuit may be filed.

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Vacancy Exclusions Are Effecting More Claims In Today's Economy

In today’s down economy, more and more homes, condominiums, and buildings are becoming vacant each day. Recently, many national news sources picked up a story out of Ft. Meyers, where one family was the sole resident of a 32-story condominium building. While the family undoubtedly enjoyed exclusive use of the pools and other amenities, this freedom was not without problems. The family reported that they often found themselves dealing with trespassers and vandals roaming the empty building.

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Is It Reasonable For An Insurer To Request Examinations Under Oath Of Unit Owners During A Claim?

The number of examinations under oath that can be reasonably requested and whether there is compliance with those requests are common issues in condominium association insurance claims, especially in loss investigations for reopened hurricane claims. There have been several posts in the past weeks regarding the topic. I thought I would write about a hypothetical South Florida case where an insurer makes excessive requests for examinations under oath while “investigating” the claim of a condominium complex with several-hundred units.

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How To Protect Your Roofing Investment

(Note: This guest blog is by Steve Thomas, president of Roof Leak Detection Company, Inc., a Certified Testing Laboratory located in South Florida which specializes in testing and consulting services for commercial and industrial properties).

The past few years have taught building owners, property managers, and condominium managers an uneasy lesson about roofs. Most have discovered that if their roofs fail, they may still face a fight with their insurance company to recoup their losses. This dilemma can be avoided in many instances if one simple rule is followed: Document the condition of your roofing system.

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Substantial Compliance and the Examination Under Oath

Last week, Shaun Marker wrote in “How Many Examinations Under Oath Can an Insurer Demand of an Association,” that the answer is “it depends.” This reminded me of the second part of a case I wrote about a few weeks on the Property Insurance Coverage Law Blog. The first part of Vision I Homeowners Ass'n, Inc. v. Aspen Specialty Ins. Co., 674 F. Supp. 2d 1333 (S.D. Fla. 2009) dealt with late notice of claims, but the second part of the case dealt with Examinations Under Oath (EUO).

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How Many Examinations Under Oath Can An Insurer Demand Of An Association?

The answer to this question is a resounding, it depends. As is often the case in law, the answer to this question depends on such things as the particular language of the policy, the areas of inquiry requested by the insurer, and whether different individuals have knowledge regarding the areas of inquiry.

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Hurricane Preparedness for Insurance Coverage

With Tropical Storm Bonnie passing through South Florida this past weekend, I thought this would be a good time to address the importance of hurricane preparedness. There are plenty of resources and guides for preparing property for a disaster, but I want to focus on preparing condominium insurance coverage.

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Failing To Obtain Regular Appraisals Can Hurt Associations After A Large Loss

The second named storm of the year has crossed Florida, and it will only be a matter of time before another tropical system strikes the state. While there are many problems that an association can face after a loss, few are harsher than the effect of a coinsurance penalty that reduces the amount paid on an otherwise valid claim. Many policies, especially large commercial polices, contain coinsurance provisions. Unfortunately, many directors and managers do not understand what they mean or the effect that they can have.

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Submitting Volumes Of Documents Through Which An Insurer Can Make An Intelligent Inquiry Into The Details Of The Loss Does Not Relieve An Insured Of Its Obligation To Appear For Examination Under Oath

Here are common problems that arise when an insurance carrier requests examinations under oath in a claim filed by a condominium association:

  • The board of directors has changed and the current board members are not familiar with the details of the claim, damages, previous repairs and future necessary repairs;
  • The current board members are aware of the voluminous records and documents kept by the previous board through which the insurance carrier would be able to intelligently assess the details of the loss being claimed; and
  • The current board members will provide the insurance carrier with the documents and information for the insurer to ascertain all of the details of the claim, damages, previous and future repairs.
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More on Errors in Insurance Applications

The other day, a colleague and I were discussing potential insurance issues that could come up when another major catastrophe hits Florida. The conversation led to the subject of insurance application errors, which reminded me of Corey Harris’ post from June 8 of this year. Corey’s post accurately describes the rule of law in Florida under Florida Statute § 627.409, that any misrepresentation on an insurance application in Florida, whether innocent or intentional, may void coverage.

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Insurance Coverage Provided By The Condominium Association To Condominium Property Is Considered Residential Insurance Coverage

Your first impression after reading the title of this article may be: “well that is obvious since there are residents that live within condominium associations.” Condominium claims are sometimes referred to simply as commercial claims when, in fact, they are classified by Florida Statute as “residential.”

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Examinations Under Oath Can Be Difficult For Associations

All insurance policies place certain obligations on the insured in the event of a loss. While most policyholders do not understand all of the terms and conditions of their policy, these post-loss obligations are extremely important. Failing to fulfill these obligations may be grounds for an insurer to deny an otherwise valid claim in some circumstances; therefore, all board members should read and understand what to do after a loss occurs.

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More on New Changes to Condominium Insurance Legislation

I received several questions on my last post regarding the force place insurance provision that will be removed from Fla. Stat. § 718.111(11) on July 1, 2010. This week, I explain the history of the provision to clarify some of the information I provided two weeks ago.

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The Difference Between The Duty To Maintain and The Duty To Insure Condominium Association Property

There are often disagreements between association board members, unit owners and property managers regarding what constitutes condominium association property for insurance claim purposes. In these situations, there can be confusion between the association’s duty to maintain condominium property and the duty to insure condominium property. The condominium statute, §718.111(11), addresses the association’s duty to provide primary insurance coverage protecting the association.

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New Changes to Condominium Insurance Legislation

(Note: this guest blog is by Jeremy Tyler, an attorney with Merlin Law Group in the Coral Gables office).

I am very excited to have the opportunity to contribute to this blog. Shaun Marker and I will be contributing to the Condominium Insurance Law Blog each Monday. Please check back frequently, as we have a lot to discuss.

For starters, in the recent legislative session, the Florida Legislature made numerous changes to Florida Statute § 718.111, which regulates condominium associations. For this blog, I’ll focus on the changes the Florida Legislature made to § 718.111(11) that deals with condominium insurance.

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June 1st Is The First Day Of Hurricane Season: Is Your Association Prepared?

As I mentioned last Friday in Hurricane Expert Revises Prediction, experts are predicting one “hell of a year” for hurricanes. While the Atlantic has not picked up yet, we have already seen the effects of Tropical Storm Agatha, which killed over 100 people in Central America and caused a large amount of property damage. This should be a wakeup call to complacent associations and should encourage those who have not begun preparing for a potential storm to do so.

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Thoughts Regarding the 2010 CAI Conference

Because of the unfortunate events involved in the sinking of the Deepwater Horizon and the subsequent gulf oil spill, I have not been able to take a minute to reflect on the 59th Annual Community Associations Institute National Conference which ended last week. I have been fortunate to attend many of these meetings over the years, and have watched CAI grow into a remarkable resource for anyone who is involved with Condominiums or Home Owners Associations.

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Florida Condominiums Are Already Feeling the Effect of the Gulf Oil Spill

Our firm has been receiving calls from a large number of Florida condominium associations over the past few days regarding the increasing problems associated with the oil spill that is plaguing the gulf coast. I have a personal connection to this growing crisis. I spent a large portion of my life in Destin, Florida, and part of my family still lives and works in the area. Late last night, I flew to the panhandle to see what our firm could do to help.

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Insuring A Condominium Building: What Is Covered Under The Association Policy?

One of the first steps in dealing with an association’s claim, is determining what is covered under the association policy and what is covered under the individual unit owner’s policy. Many associations and insurance professionals are unclear as to what exactly is covered by the association policy, and questions constantly arise during the claim.

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Florida Southern District Court Upholds Condominium Association's Right to Bad Faith Discovery

In Florida, discovery in breach of contract actions usually centers around the mystical “claim file” which insurers guard more closely than their first born child. As most who read this blog already know, the “claim file” has been held to be generally protected by Florida courts, and usually undiscoverable in a breach of contract action.

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