How to get results from insurance carriers?

By September 23, 2018News, Questions & Answers

Q: Our condominium sustained significant damage from Hurricane Irma. It has been a year and our insurance carrier is offering a settlement that is woefully inadequate to address our damages. We have been advised that we have window damage and the roofs must be replaced. The insurance carrier is ignoring our demands. What do we do?

-T.C., Naples

A: It is hard to believe that Hurricane Irma was a year ago, but your question is unfortunately still a common question. Many insurance carriers are denying coverage, breaching the insurance policy requirements, or taking no action to delay the claim adjustment. On top of that, Southwest Florida received numerous roofing and water remediation contractors from all over the country that formed in Florida in October 2017. In this atmosphere, a few of our condominium clients had great experiences with their contractors and insurance carriers, but the more common experience is frustration and delay.  

Our Firm employs a team of attorneys and staff that are devoted solely to assisting condominium and homeowners associations with their insurance claims. In part, this is because the frustration and delay have reached a critical point and the Board needs to compel action to repair their communities.

First, you must determine whether you have intentionally or inadvertently assigned your insurance claim to a third party. When approached by newly formed roofing contractors and remediation companies, many condominiums assigned their insurance rights to the contractor. This is accomplished by a document referred to as an “Assignment of Benefits”. When the Board signs this document, all of the rights under the policy, including the right to adjust the claim and receive proceeds, are assigned to the contractor. In other words, it is no longer the “Association’s claim” because the beneficial interests in the policy are assigned to the contractor. The contractor then promises to negotiate the claim “at no cost to association” and promises a new roof or other repairs as soon as possible. While a few of our clients have had positive experiences after assigning their rights to a third party, many have not. If you have assigned your benefits to a third party and want to take proactive measures to adjust your insurance claim, you should seek counsel from a Florida licensed attorney to determine if a) the benefits were actually assigned, and b) whether you can compel the assignee to take action against the insurance carrier to honor the policy requirements.

Next, if you have not assigned your insurance benefits, you have rights. If the insurance carrier is ignoring your claim, improperly denying coverage, or offering an inappropriate scope of repairs, you may need to take similar proactive measures to compel a resolution. You may need to hire professionals and insurance experts that understand wind damage, complicated insurance policies, and relevant legal issues such as bad faith and breach of contract. Each insurance carrier is different, and so is each insurance policy. It is important that you understand your rights and the available mechanisms to enforce your rights.

Q: My neighbor has been renting his unit all summer. It feels like a new tenant is coming and going each week.  In the past, I asked to rent my unit on vacation rental sites in a similar way and the Board denied my request. How is my neighbor getting away with this?

-H. D., Bonita Springs

A: To properly answer the question, the first step requires an analysis of your specific condominium documents. Most condominium documents will address leasing and provide minimum lease terms. It is very possible that your association documents permit weekly or short- term rentals. If so, these landlord/owners will have certain responsibilities with respect to taxes and registration with the state, but it does not necessarily violate your condominium documents depending on the particular language.

If the documents require leases to be more than 1 week, this may be a violation. Many landlord owners in this context will claim that the tenants are family and will even coach the tenants to tell the Association that they are family members visiting as guests.  

If your neighbor is getting away with weekly rentals that actually violate the condominium documents, it is also possible that the Association does not know. After the Association is aware of the violation, the Association can take multiple steps to compel your neighbor’s compliance with the leasing rules, including fines, suspensions, and possible injunctive relief. Each violation presents a unique set of facts and circumstances, so unfortunately there is no universal solution.

Thus, for now, my recommendation is to notify the Association and for the Association to consult independent legal counsel to determine whether the neighbor is actually violating the covenants and, if so, the appropriate remedial action.

Q: Our property management company is very good and our particular manager is very competent. We have been acting under our existing management agreement for 5 years. Some of the members are questioning whether we should seek proposals from other companies. What is your recommendation?

-P.D., Naples

A: This is not really a legal question, but there are some legal points to address. First, for most associations, the management company is a significant budgetary expense. It is important to note that although the statutes for condominiums and HOAs require competitive bidding for larger expenses, each statute also specifically provides that the association is not required to obtain competitive bids for community association managers irrespective of the cost.  

It is also important to note that a good property manager has institutional and historical knowledge that is valuable. Because the manager maintains the official records and interacts with the vendors, the manager and management company will have knowledge that is not written down in the official records and relationships with vendors and owners that is immeasurable. Thus, if you are satisfied with your vendor, there is no legal obligation to change at any time.  

There comes a time, either by law or by the term of the contract, that the Board should approve a new contract. At this point, the Association should consider and approve a new agreement even if it is with the same management company. Many associations will obtain bids for comparison purposes, but there is no legal requirement to obtain competitive bids and there is no obligation to change vendors.