With Halloween just around the corner, I figured this is the perfect time to share some horror stories of insurance claims that have taken place at community associations…
A construction worker placed a bucket on top of another bucket to reach higher up to perform work at a cooperative association. He did so on his own accord without any instruction and fell only 36 inches. He was awarded $4.25 million. Always consult with your insurance broker and corporate attorney to confirm that the language in the contract is correct and that the contractor being hired has adequate coverage.
A unit owner and board member battle started with outside decor and ended with almost a million dollars in legal fees. Initially, this seemed to be like any other dispute between an association and a resident. The owner moved in and hadn’t followed association rules surrounding items such as his garden, overnight parking, and satellite dish placement. The biggest problem was a flower bed wall that he installed. He says he had permission. The board says he didn’t.
Things should have calmed down from there. The owner could have removed the wall, or the board could have found a way to compromise. Instead, seven years of court battles led to a historic $1,000,000 in legal fees.
Personal vendettas can drag board members into frivolous lawsuits. Make sure your association has a stand-alone Directors & Officers policy in place.
A trusted resident of a condominium association served as treasurer of the building’s board. Over the course of six years, he used more than $300,000 in association fees for personal use. Residents of the building had paid a special assessment for roof repairs that wound up never being completed. The board did not have Crime Insurance in place, and, as a result, the association did not have the necessary funds to maintain the 50-year-old complex without reassessing the members for the repairs.
A monoline crime policy would have helped recoup the stolen funds.
A building owner paid off their mortgage and is no longer required by a lender to maintain insurance. Due to increased prices and the hard market, the building owner chose not to renew their Commercial Package policy, ultimately self-insuring the property. A resident slipped and fell on the lobby floor of the apartment building. The fall resulted in head trauma, which caused the injured party to receive immediate surgery. Luckily, the injured party was ok but sued the building owner for medical bills and monetary damages. The payout of over $700,000 was the full responsibility of the building owner, as there was no Liability coverage in place.
The medical bills and damages would have been covered under the $1M per Occurrence General Liability in the Commercial Package policy.
An accidental kitchen fire in one condominium unit spread to neighboring units, causing extensive smoke and fire damage to the building and residents’ personal belongings. As per the association’s bylaws, the association’s insurance will replace what was damaged due to the fire, up to the unit’s original specification. Unit owners are responsible for covering the fixtures inside their unit, any updates or changes from when the unit was originally built, and their contents/personal property.
None of the unit owners affected by the fire had their own Homeowners HO6 policy, which would have replaced damage to the inside of their unit as well as their belongings.
The best way to prevent something like this from happening at your association is to ensure that you have the proper insurance coverage in place. If you have any questions about your policies, I’m here to help. Reach out to me anytime, and remember that Mackoul offers Contractor Insurance Review and Homeowners Insurance Monitoring to help protect you, your building, and your residents. Happy Halloween!
