Boards and associations, just like individuals, carry insurance coverage to protect them from liability, loss and other financial and legal problems, although the issues may be a little different than the typical auto or single-family homeowners’ insurance. But deciding when, and if, to file a claim versus paying out of pocket can be conundrum.
Whether it’s for property damage or an injury on the premises, paying a claim can be very expensive for insurers. So it’s not surprising that a history of claims, frivolous or serious, can cause a building or association to pay higher premiums and, in extreme cases, to be dropped from its insurance policy entirely,
What are the main criteria that a co-op, condo or HOA development should consider when deciding whether or not to submit an insurance claim?
Chris Snow, an agency principal with Bernier & Snow Insurance Agency in Rochester, New Hampshire, says that with property claims, the association should consider the cause of the loss, the property that is damaged, and the amount of the master policy deductible. “The cause of the loss must be due to a covered cause of loss, such as fire, collapse, ice dams etc.,” Snow says. “For example, if the damage is caused by an earthquake but the policy does not include this peril, then there’s no coverage and no claim.”
Of course, he says, a claim also has to involve covered property. “If the damage is to an ornamental area rug, that is not covered under the master policy—and again, there's no coverage and no claim.”