Associations are sometimes not listed in the declaration pages of insurance policies. I have seen property management firms, program administrators and the wrong Association listed in the declaration pages of insurance policies. While infrequent, it happens enough that those responsible for obtaining the insurance for an Association should make certain the insurers correctly list the Association as an insured at the point of sale.

A recent case shows how, after a loss occurs, an insurance company may look at the Association that is not listed on the declarations page.1 In this case, the Association had units in a hotel. The units were often leased, and the Association allowed the hotel to purchase the policy which the Association then paid for its portion of the premium. The declaration pages did not list the Association and the insurer then refused to pay the Association for lost income following a tornado loss.

The insurer argued it could not be sued because the Association lacked standing to bring suit. The insurer argued only those named in the policy could file suit. The trial court disagreed noting:

Plaintiff has alleged that the policy insured ‘the entire Hotel,’ including condominiums owned by Plaintiff’s members for lost rental income. Plaintiff attached to the complaint a document dated May 26, 2011 titled ‘Evidence of Commercial Property Insurance,’ which indicates that ‘Penthouse COA, Inc’ is an ‘Additional Interest’ under the policy. …Plaintiff also alleges that throughout the insurance claim process, Defendant acknowledged and affirmed that Plaintiff was a loss payee under the policy and calculated the lost rental income of Plaintiff’s members as part of the insurance proceeds.

Although Defendant argues that the policy does not list Plaintiff as a named insured, a review of the 95-page document attached to the complaint does not confirm this. First, there is an endorsement modifying the policy which indicates that there may be an ‘Additional Named Insured’ ‘Per schedule on file with us.’ ….Second, the Schedule of Mortgage Holders or Loss Payees. Form RM1102, does not specifically list any mortgage holders and loss payees, but rather refers to ‘certificates of insurance on file with us.’ … Based on these two documents, there may be additional schedules and/or certificates in the possession of Defendant and not before the Court, which may name Plaintiff as an additional insured or loss payee, as alleged in the complaint.

Defendant also argues that the ‘Evidence of Commercial Property Insurance’ (doc. 29-3) that lists Plaintiff as an ‘Additional Interest’ was not created by Defendant and does not indicate Plaintiff is a party to the policy. However, the document speaks for itself, regardless of whether it was created by an insurance agency on behalf of Defendant or Defendant itself. Defendant suggests that the form specifically indicates that Plaintiff is neither a mortgagee nor a loss payee because neither of those boxes beneath Plaintiff’s name were checked. However, this raises questions as to whether this was an accidental omission, because it is unclear what ‘Additional Interest’ would otherwise mean, or why Plaintiff would be entitled to notice of termination of the policy if it was not a mortgagee or loss payee.

Therefore, accepting as true all facts alleged in the complaint and considering the exhibits attached to the complaint, there are enough facts presented in support of Plaintiff’s claim that it is either an additional insured or loss payee under the policy.

This case is at the very beginning stages. Yet, the entire controversy could have been prevented by naming the Association in the declaration pages of the policy as an insured.

The bottom line is that Association property managers, officers, and general counsel need to carefully read the declaration pages of the insurance policy and make certain the Association is named and correctly named on the policy as an insured entity. This case demonstrates that some insurers will take a different position after the loss than at the point of sale.
1 Penthouse Condominium COA, Inc. v Liberty Mutual Fire Ins. Co., No. 18-3353, 2019 WL 2396579 (Mo. S.D. June 6, 2019).