Condo Owner Settles $25M Storm Damage Suit: Navigating Insurance Claims

Imagine facing nearly $25 million in storm damage to your condo, only to have your insurance company deny the full claim. This was the reality for the Canyon Club Condominium Owners Association in Colorado, who recently settled a seven-year-old federal lawsuit against their insurer, American Family Mutual Insurance Co. While the settlement amount remains confidential, this case highlights the complexities and potential pitfalls of navigating insurance claims for condo owners after major storm damage.

Understanding Condo Insurance: What’s Covered?

Condo insurance is unique because it involves two policies: the condo association’s master policy and the individual owner’s policy (HO-6). The master policy typically covers the building’s exterior, common areas, and sometimes the structural components of individual units, such as:

Exterior building: Roof, windows, doors, and walls.
Common areas: Hallways, lobbies, gyms, pools, and clubhouses.
Structural items: Foundation and basic structural elements within individual units.

The HO-6 policy, purchased by the condo owner, covers:

Interior of the unit: Kitchen and bathroom cabinets, flooring, and wall coverings.
Personal property: Furniture, clothing, and electronics.
Additional Living Expenses (ALE): Hotel bills and meals if the condo is uninhabitable.
Loss assessment: Coverage for fees charged by the condo association for damage to common areas.

Understanding the division of coverage is crucial. For instance, if a hurricane damages the roof and causes water damage inside a unit, the association’s policy might cover the roof repair, while the owner’s policy covers damage to personal belongings and interior finishes.

Common Causes of Storm Damage in Condos

Condos are vulnerable to various types of storm damage, including:

Wind Damage: High winds can rip off shingles, damage siding, and break windows, leading to leaks and structural problems.
Water Damage: Heavy rain, flooding, and storm surges can cause extensive water damage, leading to mold growth and structural deterioration. Water can enter through leaky roofs, damaged windows, and improperly sealed entry points.
Hail Damage: Hail can damage roofing materials and create punctures that lead to leaks.

Water damage is particularly common in condos, with burst pipes, appliance leaks, and HVAC malfunctions contributing to a high percentage of insurance claims.

Navigating the Insurance Claim Process

Filing an insurance claim after storm damage can be overwhelming. Here’s a step-by-step guide to help condo owners navigate the process:

Ensure Safety First: Prioritize safety and avoid returning home until authorities declare the area safe.
Document the Damage: Before making any repairs, thoroughly document all damage with photos and videos. Include images of broken windows, roof damage, water stains, and damaged personal property.
Contact Your Insurer: File a claim with your insurance company as soon as possible. Provide all relevant documentation, including photos, videos, and a list of damaged items.
Notify Your Condo Association: Inform the condo association about the damage, as they may have additional steps or resources to assist you.
Mitigate Further Damage: Take reasonable steps to prevent further damage, such as covering holes in the roof or boarding up broken windows. Keep receipts for these temporary repairs, as they are typically reimbursable.
Meet with the Insurance Adjuster: Be present during the adjuster’s inspection to point out all damages and provide your documentation. Ensure the adjuster sees and documents all the damage you’ve identified.
Obtain a Damage Assessment: Get a written assessment of the damage from a trusted Storm Guard Representative to determine if an insurance claim is necessary.
Review Your Policy: Understand your policy coverage, limits, deductibles, and exclusions. This will help you determine what is covered and what to expect from the claims process.
Stay Informed: Keep in contact with your insurance carrier for updates on the claims process. Be patient but proactive, and follow up regularly to ensure your claim is moving forward.

Common Challenges in Condo Insurance Claims

Despite following all the right steps, condo owners may encounter challenges during the insurance claim process:

Denials: Insurance companies may deny claims for various reasons, such as claiming the damage was pre-existing, due to poor maintenance, or not covered under the policy.
Underpaid Claims: Insurers may offer a settlement that is too low to cover the full extent of the damage and necessary repairs.
Delays: The claims process can be lengthy, especially after major disasters when insurance companies are inundated with claims.
Disputes over Coverage: Disputes may arise over what is covered under the master policy versus the individual owner’s policy.

How to Dispute an Unfair Claim Denial

If your insurance claim is denied or undervalued, you have options:

Review Your Policy: Carefully review your policy to understand what is covered and ensure the denial is not due to a misunderstanding.
Gather Evidence: Collect all documentation related to your claim, including photos, videos, receipts, and communications with your insurer.
Request a Written Explanation: Ask your insurance company for a written explanation of why your claim was denied.
File an Appeal: Most insurance companies have an appeals process. Submit a formal appeal along with all your evidence and a clear explanation of why you believe the denial is unfair.
Hire a Public Adjuster: A public adjuster can advocate for you, review your policy, assess the damage, and negotiate with the insurance company on your behalf.
Consult an Attorney: If you are facing unexplained delays or denials, a lawyer specializing in insurance disputes can help you understand your rights and pursue legal action if necessary.

The Role of a Public Adjuster

A public adjuster is a professional who represents the policyholder, not the insurance company. They can:

Review your insurance policy to understand your coverage.
Inspect the property and document all damages.
Prepare and present damage estimates to the insurance company.
Negotiate with the insurance company to reach a fair settlement.

Hiring a public adjuster can be particularly beneficial for complex claims or when you feel the insurance company is not treating you fairly.

Legal Considerations and Deadlines

It’s essential to be aware of the statute of limitations for filing a property damage claim in your state. In Florida, for example, you generally have four years to file a lawsuit for damage to real or personal property. However, for hurricane or windstorm claims, recent legislation has shortened the statute of limitations to one year from the date of loss. Missing these deadlines can result in forfeiting your ability to recover compensation.

Preventing Future Storm Damage

While you can’t control the weather, you can take steps to minimize the risk of storm damage to your condo:

Regular Inspections: Conduct regular inspections of your unit and the building’s exterior to identify and address potential issues early.
Maintenance: Maintain windows and doors regularly, ensuring proper sealing around openings.
Secure Balcony Items: Secure balcony furniture and decorative items when a storm is forecast.
Clean Gutters and Drains: Keep gutters and drain lines clear to prevent water from pooling and leaking into the building.
Install Protective Measures: Consider installing hurricane shutters or impact-resistant windows and doors.

Conclusion

The case of the Canyon Club Condominium Owners Association serves as a reminder of the challenges condo owners can face when dealing with storm damage and insurance claims. By understanding your insurance coverage, documenting damage thoroughly, and being prepared to advocate for your rights, you can navigate the claims process more effectively and protect your investment. If necessary, don’t hesitate to seek professional help from a public adjuster or attorney to ensure you receive a fair settlement.