Fri, 25 May 2012 On May 24th, the U.S. Senate passed legislation to extend the National Flood Insurance Program (NFIP) for an additional 60 days. The legislation, H.R. 5740, now returns to the U.S. House of Representatives for consideration. Unless an extension is signed into law by May 31st, the NFIP will no longer have the legal authority to issue new flood insurance policies or renewals. Read more... Thu, 24 May 2012Connecticut Governor Dan Malloy (D) signed HB 5536 into law May 23, which revises requirements concerning certification as a community association manager and continuing education for a licensed real estate broker. The bill requires all community association managers to successfully complete a nationally recognized course on community association management. The bill also requires community association managers to pass the National Board of Certification for Community Association Managers' Certified Manager of Community Associations (CMCA) examination or similar examination. Read more... Wed, 23 May 2012Mark A. Holmgren
Homeowners associations are frequently presented with situations that beg the question of whether the association should tender a particular matter to its insurance company as a claim or potential claim. This can be a threat of asserting a claim, threat of a lawsuit, or property damage requiring repair in an amount the association believes may not exceed the amount of the deductible. Associations are often reticent about tendering to insurance for fear of causing an increase in their insurance rates. While those fears are not unfounded, the potential cost of not tendering far exceeds the cost of a marginal rate increase brought about by tendering minor claims.
Most insurance policies contain provisions requiring the insured to promptly notify the carrier of any claims or potential claims. A typical policy provision might say:
If during the Policy Period the Insured shall become aware of any circumstances which may reasonably be expected to give rise to a Claim being made against an Insured, the Insured shall give written notice to the Company of the circumstances and the reasons for anticipating such a Claim with full particulars as to dates and persons involved.
Associations often engage in behavior that arguably violates this policy language to their own peril. For example, a condominium unit owner may report a roof leak after a storm, and the association may believe the cost of repair would be less than the deductible amount. The association may hire a contractor to begin work, and the contractor may find additional damage that causes the cost of repair to skyrocket. At that point, the association may decide to tender and the insurance company could state that the tender was untimely and refuse to pay the claim. The association would be left to repair the damage – and answer to angry homeowners wondering why association funds are being used – on its own.
Associations make their own decisions about what to tender and when to tender it. Those decisions should not be made lightly, and the best practice is to err on the side of tendering. |