An HOA’s notice of a property claim to its insurer 21 months after it suffered hail damage is too long and the HOA had no good reason for the delay according to a recent ruling by the Colorado Federal District Court. The ruling in the case of Cherry Grove East Condominium Association vs. PHILADELPHIA INDEMNITY INSURANCE COMPANY and AMERICAN ALTERNATIVE INSURANCE COMPANY, highlights the importance of regular inspections, after hail storms, to find damage and to file any and all claims promptly to avoid denial.
Most policies require that “prompt” notice of a loss must be provided and a description of the property involved in the loss must be given “as soon as possible”. In this case, two separate hail damage claims were denied because the Association took so long to file the claims – one of which was made 21-months after the damage occurred. While there is no hard and fast rule for the amount of time in which you must file a claim after sustaining damage, the sooner you do the better or you must have a really good reason for the delay.
To further complicate this case, the Association switched insurance companies between damage caused by two separate hail storms. The first on 9/29/2014 and the second 5/28/2015. When the Association realized there was damage to the property over a year after the second hail storm hit, the existing insurance company deferred the claim back to the original insurance company saying the damage was caused the first hail storm that hit on 9/29. Once a claim was filed with the original insurance company, coverage was denied due to the 21-month delay in claim filing. The Association also filed a property claim with their existing insurance company for hail damage due to the second storm but that one was also denied due to a 14-month delay in filing that claim. The insurers refusing to provide coverage because of the delayed notice triggered a lawsuit by the association for bad faith and failure to defend.
There’s no arguing that taking as long as 21-months to file a property claim is neither “prompt” nor does it provide information about the damages “as soon as possible” to the insurance company. In fact, the court’s ruling states the “insured’s failure to comply with his or her first-party insurance policy’s prompt notice provision prevents his or her recovery.”
With both claims denied, this means the Association is now responsible for the property damage and must pay for repairs out of pocket. It’s also likely this Association will now have roof exclusions in future policies by any future insurance carrier.
This case should serve as a learning lesson to other HOA’s and Associations: you must have properties inspected regularly to investigate and document any damages. Most insurance also policies contain language that states it is the policyholder’s job to mitigate and prevent any future damage – so not knowing damage exists is NOT a sufficient defense at this point. Regular inspections, especially after a severe storm, can help identify and find any damage and provide the documentation needed to file a potential claim. Should the property have damage, a claim must be made as soon as possible to avoid a valid claim being denied.
Insurance costs are an expensive but necessary part of maintaining a successful HOA. You pay a lot in monthly premiums – don’t let valid claims be denied. Here’s what you can do to prevent this from happening to your HOA:
- Keep detailed records of all property maintenance and inspections
- Request a damage inspection from a trained professional after each severe weather event
- Report property damage to your insurance company right away
If your association has not yet had a damage inspection after the May 8, 2017 hail storm, now is the time to get one and we can help. Our highly trained and skilled Loss Consultants know what to look for and can provide detailed property inspection reports to help protect you from situations like this.
Get peace of mind with a proven, honest damage assessment from a C3 Group Loss Consultant. If filing a claim for storm damage is necessary, we will ensure your claim is settled properly and efficiently. Contact us today to learn more.
