Condominium Insurance Claims: Navigating the Complexities with Expert Help

Condominium insurance claims are among the most complex for property owners to navigate.

The unique nature of condo ownership creates a tangled web of responsibilities between individual unit owners and the condo association—often leading to confusion and gaps in coverage during the claims process.

Why are these claims so challenging? According to the Community Association Institute, the U.S. is home to over 150,000 condominium communities with roughly 30 million residents. Each operates under different bylaws and insurance policies, often with conflicting interpretations of who is responsible for what.

 

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The Divided Insurance Responsibilities in Condominiums

Condominium ownership differs fundamentally from single-family home ownership. Unit owners possess their individual units while sharing ownership of common areas with other residents. This division extends to insurance responsibilities as well.

From an insurance perspective, this means:

1. Individual unit owners must insure their own units and personal property

2. Collectively, all owners (through the association) must insure common areas

3. The boundaries between these responsibilities are often unclear and vary by property

The individual unit owner typically needs to insure everything “within the four walls” of their unit. However, this seemingly simple definition raises numerous questions:

• Does the unit owner need to insure original paint or wallpaper?

• Who is responsible for insuring flooring and upgrades from carpet to marble?

• What about the support structure for the floor that also serves as the ceiling for the unit below?

• Who covers upgraded countertops, cabinets, or non-load-bearing walls that have been moved?

These questions highlight why the condo insurance claims process often involves coordinating between multiple insurance policies and stakeholders.

Understanding Condo Master Policies: All-in vs. Bare Walls-in

Your condo master policy works in conjunction with association bylaws to determine coverage responsibilities. There are primarily two types of master policies that associations use, and understanding the difference is critical when filing claims.

All-in Condo Policies

An All-in condo policy (sometimes called an “all-inclusive” policy) provides broader coverage where the association is responsible for insuring:

1. Common elements (landscaping, structural foundations)

2. Limited common elements (hallways, walls containing electrical wiring or sprinkler piping)

3. Unit property (inside of exterior walls, interior partition walls, countertops, cabinetry, plumbing fixtures)

4. Individual unit improvements and betterments

With an All-in policy, individual unit owners only need to insure their personal property within the unit.

Bare Walls-in Policies

A Bare Walls-in policy limits the association’s responsibility to insuring only the common elements and limited common elements. The individual unit owner must insure:

1. All unit property

2. Any improvements and betterments

3. Personal property

Even with Bare Walls-in policies, the definition of a “unit” varies significantly. It might mean everything from the studs inward, the unfinished wall inward, or the sub-floor up and ceiling down—or any variation thereof.

Why Condo Insurance Claims Are So Difficult to Manage

Condominium insurance claims present unique challenges that make them particularly difficult to navigate:

1. Varying Bylaws and Interpretations: Condominium bylaws can vary significantly and are often open to different interpretations regarding insurance responsibilities.

2. Non-standardized Policy Language: There is no standardized language in master insurance policies, creating confusion about coverage boundaries.

3. Vague Policy Wording: Insurance policies for condominiums are often intentionally vague and defer to bylaws, adding another layer of uncertainty.

4. Conflicted Board Members: Condo association board members—typically unit owners themselves—often face conflicts between their fiduciary duty to the association and their responsibility to individual owners.

5. State-Specific Legislation: Some states have enacted specific legislation determining insurance responsibilities, and these laws frequently change.

When a loss occurs, it’s often too late to address the underinsurance or coverage gaps that may exist between association and unit owner policies.

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What Is a Public Adjuster and Why You Need One for Condo Claims

What is a public adjuster? A public adjuster is a licensed professional who represents policyholders in insurance claim negotiations, rather than working for the insurance company.

For condominium claims, public adjusters with experience in condominium properties can help navigate the complex claims process. They understand the intricate relationship between association master policies and individual unit policies, helping to prevent coverage gaps that often occur in these situations.

What Does a Public Adjuster Do to Maximize Your Claim Settlement

What does a public adjuster do? They evaluate damage, review policies, document losses, and negotiate with insurance companies on your behalf. For condominium claims specifically, they:

1. Analyze jurisdictional requirements and condominium bylaws

2. Differentiate coverages between association and unit owner policies

3. Appropriately value damages covered by each policy

4. Advocate for both the condo board and unit owners to maximize benefits from all insurers

When insurance claims involve condominiums, insurers often take opposing positions. The association’s carrier may deny responsibility for certain damages and direct coverage to the unit owner’s carrier. Simultaneously, the unit owner’s carrier may deny the same damages and redirect the claim back to the association’s carrier. This creates a frustrating coverage gap for property owners.

How Sill Public Adjusters Help With Condominium Insurance Claims

Sill has extensive experience managing both sides of condominium losses, successfully representing condo boards and unit owners in insurance claims. Our team understands where the potential pitfalls are in these complex claims and helps all parties avoid them.

Increasingly, Sill is being retained as an objective, independent resource with the expertise to:

1. Act as a referee between all parties

2. Establish a common understanding of coverage responsibilities

3. Advocate before insurers to ensure all parties receive optimal benefits under their policies

We understand that representing yourself in condominium claims is challenging. These situations require professional expertise that goes beyond basic claims adjustment. Sill’s team includes:

• Accomplished former insurance company adjusters

• Expert building estimators

• Contents estimators

• Forensic accountants

Together, we help you and your condominium board navigate through the minefield of insurance loss claims.

Navigating the Condo Insurance Claims Process: Expert Tips

When facing a condominium property loss, follow these steps to improve your claim outcome:

1. Understand the Governing Documents: Review your condo bylaws and rules to determine if they align with state regulations.

2. Analyze Insurance Policies: Read the association’s insurance policy alongside the bylaws to determine where the association’s responsibility ends and the unit owner’s begins.

3. Coordinate Policy Definitions: Ensure that definitions in both the association and unit owner policies are understood and coordinated.

4. Consider Professional Help: Contact a public adjuster experienced in condominium claims to help navigate the process.

Identifying condo insurance coverage gaps before a loss occurs is essential to avoid underinsurance. However, after a loss has occurred, professional guidance becomes even more critical.

Why Choose Sill for Your Condominium Insurance Claim

Sill has considerable experience managing condominium insurance claims from both perspectives—representing condo boards and individual unit owners. Our expertise allows us to:

1. Determine jurisdictional requirements affecting your claim

2. Differentiate coverages between multiple policies

3. Appropriately value damages covered by each policy

4. Advocate for maximum benefits from all insurers

Don’t let yourself get caught in the coverage gap that often occurs in condominium claims. Let Sill’s team of experts help you navigate these complex waters and secure the settlement you deserve.

Contact Sill for Expert Help With Your Condominium Insurance Claim

If you’re facing a condominium insurance claim—whether as a board member, unit owner, or both—contact Sill today. Our team of experienced public adjusters will help you navigate the complexities of your claim and ensure you receive the maximum benefit under your policy.

With more than 90 years of experience and a deep understanding of condominium insurance claims, Sill is your advocate in securing fair and prompt settlements. Don’t face the insurance companies alone—let our expertise work for you.

 

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