Most property insurance companies take too long to investigate, request far too many documents, and delay analyzing the documents after they obtain them so that months pass before a decision is made on the property loss. This is not proper and not in the spirit of good faith claims service all condominiums are promised and deserve to receive. I sometimes wish the claims managers of insurance companies were Association Board members who received incessant requests from other members asking—“Why is it taking so long for the insurance company to make a decision and pay?”  

So, what can an Association do? 

The first knee-jerk reaction is to fight the insurance company on all the requests. This is understandable because many of the requests are for documents that have very little relevance to the loss. The association has to find and comb through thousands of innocuous documents.

Some of my competing colleagues try to appear like a “super aggressive” and “take no prisoners” type of lawyer, which appeals to some Association Board members. These lawyers take a strategy to negotiate about the amount of cooperation in the investigation, pare down the requests for the insurance company, and threaten litigation. The worst is when they file litigation without complying with the requests because they potentially jeopardize the entire claim and risk more litigation delay.  

A recent example of this is a Florida case where the insurance company requested documents after the Association first reported a windstorm loss nine months after the windstorm occurred.1 After allegedly not producing the requested documents or appearing for an examination under oath, the trial court denied the Association’s demand for an appraisal, finding that the issue of the Association’s cooperation was one of coverage. This implicitly raises the issue that the insurer may have to pay nothing because the Association failed to cooperate. After analyzing the facts and case law, the court ruled that:

[A]n insured’s compliance with post-loss obligations mandated by the policy, such as timely notice of the loss and cooperation with the insurer’s investigation, is a coverage question. SB Holdings, 2021 WL 3825166, at *2 (citing State Farm Fire & Cas. Co. v. Licea, 685 So. 2d 1285, 1288 (Fla. 1996)). ‘It is well settled in Florida that all post-loss obligations must be satisfied before a trial court can exercise its discretion to compel appraisal.’ State Farm Fla. Ins. Co. v. Fernandez, 211 So. 3d 1094, 1095 (Fla. Dist. Ct. App. 2017).

… there is no rule…that insureds invoking appraisal automatically cuts off insurers’ ability to demand compliance with post-loss obligations.

In this case, Clear Blue did not delay in requesting information from Baytree, asking for it within two weeks of the claim notification and specifying the roofing inspection report/estimate, photos, receipts of damages, proof of payment, and documentation of roof maintenance and repairs. Baytree has not disputed that it failed to provide the responsive documentation to Clear Blue prior to initiating the lawsuit, and it is not clear at this juncture that it has even produced these documents.

At a minimum, the coverage disputes that Clear Blue identifies raise issues of material fact and require denial of summary judgment on the claim for appraisal because the coverage issue remains unresolved. See, e.g., Gulfside, 2021 WL 3471631 at *4 (denying motion to compel appraisal and holding that the insured’s compliance on other matters did not excuse its failure to comply with the insurer’s post-loss condition, a request for examination under oath.)

So, what should an Association do? After thousands of cases with this issue being raised, my considered response in most cases is to demand that the insurance company come to the premises and start looking at the books and records of the Association as soon as possible. Virtually all Association property insurance policies state that the insurer has a right to inspect the Association books and records. We demand that they come and copy those documents as soon as possible. The insurer should have enough people to immediately analyze those and ask for follow up right away. This is a process that should happen in days or weeks rather than months. I noted this wrongful insurer delay scenario in a recent post, Travelers Guilty of Bad Faith and Loses $27 Million Verdict Over Smoke, Soot, and Ash Dispute.

There is very little to be gained by refusing to appear or answer questions at an Examination Under Oath or by failing to be cooperative, as noted in Not Answering Questions At Examination Under Oath Results In No Recovery.The issue is how you go about the cooperation and make certain that the insurer is acting promptly and in good faith.

My advice to Associations when an insurance company hires its own law firm that starts asking for documents and a possible examination under oath, it is certainly time for the Association to retain experienced coverage counsel to help move along the claim as quickly as possible and in the right direction.   

Thought For The Day

Non-cooperation with evil is as much a duty as is cooperation with good.

—Mahatma Gandhi

1 Baytree v. Clear Blue Specialty Ins. Co., No. 6:22-cv-02041 (M.D. Fla. July 11, 2023).