How Condo Associations & HOAs Cause Insurance Claim Denials

Condo associations (COAs) and homeowners associations (HOAs) could inadvertently lead to a denied claim.

Sometimes, COAs and HOAs make your claim complicated. It can be difficult to determine when an insurance claim crosses into a shared space, for example, instead of your private property.

In other cases, COAs and HOAs create delays, friction, and red tape, increasing the risk of a denied or underpaid claim.

Today, we’re highlighting some of the ways in which COAs and HOAs cause insurance claim denials – and how a good public adjuster can help.

Who Covers What?

The biggest issue involves coverage of shared space.

If your condo floods, for example, then it could damage your flooring and the unit below you, along with shared spaces like hallways and stairwells.

For larger losses, applying coverage can be complicated. Generally, here’s who covers what for insurance claims:

• Master Policy (COA / HOA): Covers shared areas and features like roofs, siding, lobbies, and hallways.
• Unit Owner Policy (HO-6): Covers the interior of the unit, personal belongings, and loss of use. May or may not cover fixtures and walls, depending on the structure of the master policy (some COAs and HOAs have a “walls-in” policy, while others do not, which could affect coverage).

Claims Disputes

Understandably, some insurance claims cover both private spaces and shared spaces, leading to claim disputes.

If a pipe bursts in a common area, for example, it could flood multiple units while also damaging shared spaces.

Complicating things further, the insurer could blame your HOA or COA for the loss – say, for lack of maintenance. Your HOA or COA could dispute this claim, dragging out the issue.

Some of the claim disputes that may arise from a COA or HOA include:

• Delayed HOA maintenance causing damage to units – say, lack of maintenance on a leaky pipe, ultimately causing it to burst.
• Denial of responsibility from the HOA or COA, forcing owners to make a claim under their own policy.
• Insurers, HOAs / COAs, and owners all pointing fingers at one another to avoid responsibility.

Insurance Claim Delays & Friction

HOAs and COAs tend to react more slowly to insurance claims than individual homeowners.

With HOAs and COAs, there may be an unclear chain of command, policy documents to review, coverage to apply, and other internal procedures before filing a claim.

Insurers, meanwhile, want you to file a claim as quickly as possible – often within 48 to 72 hours of discovering the damage.

Overall, the structure of HOAs and COAs tends to create more friction during the claim process, from complicating repairs to delaying adjusters.

The longer your HOA / COA delays the claim, the greater the risk of a denied claim.

Difficult Investigation

HOAs and COAs can also interfere with insurance claims by delaying the investigation. It could be hard for the insurance company to get access to the property and survey damage, for example.

If the insurance company’s adjuster – or third-party contractors – struggle to get access to the property, it could delay the claim.

The longer an adjuster or contractor goes without seeing the actual damage, the greater the risk of a denied claim.

Proving Pre-Existing Conditions

Insurers could dispute the claim by arguing that there were pre-existing conditions making the situation worse.

Depending on the quality of your HOA / COA, your insurer may have a case:

• Roofs deteriorate over time and need maintenance
• Water damage – like from leaky pipes or a big storm – could get ignored
• Mold could accumulate without being treated
• Other parts of the property could have excess wear and tear or neglect
• Some HOAs / COAs have poor maintenance records or service logs

HOAs and COAs have an obligation to maintain the property. Failure to meet this obligation – or lack of maintenance evidence – could lead to a denied claim.

Other Ways HOAs & COAs Complicate Claims

Other ways in which HOAs and COAs can complicate claims include:

• Condo Declarations & HOA Bylaws: Different associations have different rules. Who’s responsible for what? Check the insurance clauses in your HOA for clarity.
• Reimbursement Rules: Can owners seek reimbursement from the association after a loss?
• Special Assessments: HOAs and COAs can issue special assessments after a loss. If insurance doesn’t cover the full value of the loss, then members could be forced to pay a one-time fee – say, an extra $25,000 per member to repair a roof. Check your policy for loss assessment coverage to see if insurance can cover this.
• Red Tape, Delays, & Friction: Aside from the issues above, HOAs and COAs can simply add friction to an insurance claim process. The more friction there is, the longer the claim takes – and the greater the risk of delays and issues.

How Public Adjusters Help

Public adjusters can help individual unit owners and HOAs / COAs get the compensation they deserve for their insurance claims.

As licensed public adjusters, we’ve navigated tricky claims involving HOAs, COAs, and private owners.

Find a Public Adjuster

Here are some of the ways in which a good public adjuster can help:

• Full Claim Handling: Insurance claims are stressful. Public adjusters are licensed experts with proven histories of managing all types of insurance claims. A public adjuster manages your claim from start to finish to ensure an optimal outcome.
• Substantiate Your Claim & Organize Information: Public adjusters know which information the insurer needs to see to process your claim. They help organize this documentation to substantiate your claim.
• Ongoing Negotiation: Insurers take advantage of inexperienced owners and associations. They assume they lack insurance expertise – and they’re often right. Public adjusters negotiate with the insurer on your behalf. They represent your best interests – not your insurer’s bottom line.
• Overturn Denied Claims & Potentially Increase Payout: Some HOAs, COAs, or individual owners hire a public adjuster when the insurer has already denied a claim or offered a low payout. In this situation, a public adjuster can review your claim, check your policy, and ensure you receive the amount you’re supposed to receive.
• Uncover Hidden Damage: Public adjusters often find damage missed by the insurer. The insurer often wants to close the claim as quickly as possible to limit the scope of the claim. If you close the claim too quickly, you could miss damage that the insurer is supposed to cover, like smoke damage or water damage behind walls.
• No Fee Until the Job is Done: Public adjusters work on contingency. They don’t charge until the job is done – i.e. when you accept your insurer’s final settlement. At this point, the insurer charges a small, pre-arranged fee on the extra amount they earned for you through the claim.

HOAs and COAs can complicate claims. Fortunately, public adjusters make claims easy.

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Stephanie Corona

Stephanie is a property insurance claim expert with over 20 years of experience working as an insurance adjuster, expert witness, appraiser and umpire. She is passionate about sharing her expertise, knowledge, tips and training to help both property owners and Public Adjusters in their pursuit of effectively managing claims and recovering the claim settlement they deserve after a loss.