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JimF
USA
1014 Posts |
 Posted - 02/08/2003 : 22:14:02
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Handling the HO-6 claim is slightly different than handling an HO-3 or HO-4 (Renters) policy, in that an investigation into which carrier (who) is responsible for paying what. Therefore, it is more than just scoping and settling the claim with the insured, and requires an investigation involving a review of the Condo documents, and in some states (Florida comes to mind)may also involve a review and basic understanding of state condo law.
I am posting this thread in the hopes that one of the experienced adjusters here will outline the methods and methodology of investigating the HO-6 claim for our newer adjusters. Of course, anyone and everyone is invited to weigh in and share their thoughts and ideas.
Thanks for sharing so others may learn. |
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Dadx9
USA
143 Posts |
Posted - 02/08/2003 : 22:24:08
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Jim,
Excellent thread! I cut my teeth on the HO-6 policy while on my 'favorite' assignment in Beverly Hills, CA. First I must thank the Condo Guru, Sanford Plumlee. (Remember that conversation, Sandy? Just what the #*^* does this policy pay for?) This policy is why I always explain to those interested in our profession that about 40% of being an adjuster is reading skills. It is mandatory that you secure a copy of every condominium document for every condo association. It is important to have the cover page (the original intent) maintenance portions (who pays for what) the end of the document (amendments and the dates of them). There are many other things to do and I will leave the door open for the next post. |
Don
"To be held in the heart of a friend is to be a king."
Bruce Cockburn |
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KileAnderson
USA
875 Posts |
Posted - 02/08/2003 : 22:30:37
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Condo unit owners policies are my least favorite to handle because their are at least two parties involved and many times the agent must be involved as well. Of all the problems with this industry, the one that is the easiest to fix is this one. If the carrier would require the agent to list exactly what is and is not covered, possibly with a letter or number code in the policy number or something like that, these policies would be so much easier to handle.
As it is, there are a few ways to figure out what is probably covered just by looking at the info in the file. If you have a condo with a coverage A limit of $25,000 and a contents limit of $80,000 you can pretty much be sure that the only think covered under coverage A is the drywall, paint and carpet. For some reason every condo association has it's own by-laws and sometimes the exterior is covered by the condo association policy and sometimes everything but the appliances and contents are covered and sometimes nothing but the common areas are covered.
Whenever I get a condo unit owner's policy I always ask the insured if they have a copy of the by-laws, I have never had anyone say yes I do. Usually I have to call the condo association president and they will dig through the 3 or 4 boxes that the previous president gave them a couple of years ago and they have never even opened. Sometimes, when you have a condo complex with professional on site management, the property manager will have a copy. Sometimes it is 3 xeroxed pages, sometimes it is a book an inch thick.
After deciphering what the by-laws say, you can then determine coverage. Most policies I have handled cover the exterior and framing of the building under the association policy and the drywall inward is the responsibility of the unit owner, but I have seen them where the entire building is covered by the association and the unit owner is only responsible for contents and any interior improvements. In my experience agents never know what is covered and hardly ever have a copy of the by-laws.
Other than the above considerations it is handled just like a regular claim...Hah! |
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CCarr
Canada
1200 Posts |
Posted - 02/08/2003 : 23:05:09
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Condo unit owner claims can also be a gravy train, laden with fat. In my opinion, for many reasons, I think there is nothing better than getting 5 or 10, or 20 or 40 unit owner claims in one condo complex; whether that is one building or four buildings.
Once you get a set of docs, and a set of unit layouts, and cozy up to the building manager i.e. make him/her the hero in getting into all the units; life can be good. There is seldom more than four specific unit styles / layouts, and once you get the parameters of the docs in your mind; way you go - one after the other - park your vehicle at the site at 8.00 AM and leave whenever and no ladder.
If we could only convince vendors to be more diligent in assigning a single adjuster 'per address', the carrier would be happier, the consistency is there; and the gravy gets thicker. |
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KileAnderson
USA
875 Posts |
Posted - 02/08/2003 : 23:10:02
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| I helped another adjuster handle a condo association claim here in Baton Rouge a couple of weeks ago. It was 40 buildings each with 3-5 units and all 2 story spread out over about 30 acres. Not a single building was even similar to another in design. They all had the same building style but they were all shaped diferently. It took us a day and a half to measure draw and scope the roofs. (or is that rooves?) You are right though, Clayton, it was good money for a day and a half of work. |
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JimF
USA
1014 Posts |
Posted - 02/09/2003 : 00:02:11
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Kile, I think it would be dangerous for an adjuster to start making assumptions of what is covered based on Coverage A Limits.
Further, I doubt we will ever see the day when agents will be required to perform what could be a laborious task in obtaining, deciphering, and deriving the interpretations necessary to formulate coverage apportionment. Besides, that's OUR job!
Clayton makes an excellent point about the advantages of handling all of the unit owner's claims for any one insurer in a condo complex, and the gravy such can bring to a sole hanlding adjuster. While he mentioned it, there is also the advantage of having the Professional Condo Manager to accompany and open for access and inspection the various units. This is most especially helpful if not downright essential in a market such as Miami or in our coastal oceanfront communities, due to the large number of absentee owners, 'snow bird-second homers' or traveling insureds, many of whom are wealthy and/or retired.
I have had better success in acquiring the condo documents by telling my insureds in my first contact phone call that I need them to provide copies of these documents to complete the claim and to please have copies available at the inspection. This generally results in about a third complying. When I inspect, if they have not provided the copies, I suggest again that I cannot close the claim nor they get their money without the documents, and amazingly I receive another third complying within a week to ten days. The other third I chase down through contact with the condo property manager, condo association president, or by visiting the local courthouse resgistry of land records.
I find that most carriers want or require copies of the applicable pages of the condo documents submitted within the claim report or else the file is returned to the adjuster.
And again, in some states, the proper adjustment of an HO-6 claim simply requires an understanding or review of that state's condo laws.
Generally once you have the documents it is fairly easy, but there are still some sticky and often times gray areas which can still trip up the adjuster. For instance, the condo documents may provide coverage by the condo association for the original 'coverings' (carpet, paint, ceramic tile, countertops) but excludes coverage for any builder or owner upgrades. This becomes more difficult with the greater the age of the complex as there may be no one around who remembers what the original coverings or covering allowance was.
These are interesting claims which an adjuster need not fear as long as they understand the documents needed and why, where within those documents to find those answers, and how to get the documents and/or answers (state law for instance) when all else fails.
At some point we will open a thread for handling the Condo Master Policy and discuss the similar yet different nuances of handling what can be far more complex claims. |
Edited by - JimF on 02/09/2003 07:30:08 |
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KileAnderson
USA
875 Posts |
Posted - 02/09/2003 : 00:15:52
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Jim, good point. I didn't mean to say that was the way to figure out coverage. I was merely pointing out that on that night when you get 75 claims and your are reading through them and you come across a condo policy one way to figure out what you are going to be dealing with is to look at the limits. That is just a starting point, for your own info only. You should always get the documentation.
I realize that it is our job, as you said, to determine coverage, but could someone please tell me how an agent sells a policy without even knowing what it covers? |
Edited by - KileAnderson on 02/09/2003 00:17:11 |
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Newt
USA
657 Posts |
Posted - 02/09/2003 : 06:59:11
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Condo claims don't seem to be as lucrative as they first appear, especially in Florida. Many are near the water and have three policies. That doesn't include the assn. policys and by-laws.
It requires lots of setup time, more so than say the HO3. The absentee tenant being the biggest headache, which requires lots of long distance calling and getting answering machines.
I would like to work some if I had the NFIP certification. I have the FWUA. If it was a WYO (NFIP) It may or may not be easier, never been exposed so this is an oppinion.
When I took the FWUA exam I thought it was a real deal for an adjuster to get so many claims together and later discovered after more study that this gravy train has square wheels. |
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JimF
USA
1014 Posts |
Posted - 02/09/2003 : 07:47:03
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Newt, it's a small point, but the 'absentee tenant' which you mentioned in your post, would not be eligible for HO-6 coverage, which is a condo unit OWNERS policy.
Tenants, absentee or otherwise, are covered for risk of loss by the HO-4 (Renter/Tenant) policy, which could be encountered should a condo unit be rented out by an owner. In that case, an adjuster could conceivably be dealing with 3 separate policies (HO-4, HO-6 and Condo Master Policy), especially if there are tenant betterments.
While I suspect this was just a typo on your part, I didn't want to confuse any of our newer adjusters with misleading information or lingo.
While an adjuster could conceivably have 3 insurance policies (HO-6, Condo Master Policy, NFIP) to deal with in condo claims in our coastal communities, this is more likely to be a concern for the adjuster handling the Condo Master policy. Most condo owners above the 1st or 2nd floors are not going to have NFIP coverage. (Would one of the dedicated NFIP flood pros please correct me on this if I am wrong).
While it can be problematic for us as adjusters to not have the sole responsibility for more than any one claim in a condo association, think about the inconvenience to some of the poor unit owners who might have to meet with as many as 3 or 4 different adjusters to provide access to their units for inspections and claim resolution. (I reference the scenario of as many as 4 adjusters were the insured a tenant with betterments living on the 1st floor with a flood exposure).
Hope this helps to clarify. |
Edited by - JimF on 02/09/2003 07:55:22 |
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Dadx9
USA
143 Posts |
Posted - 02/09/2003 : 08:13:12
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Jim,
I think your thought is generally correct. Not many policy holders have (or are required) NFIP above 1st floor. However, they really should. Hugo took out 3 floors on the storm surge.
As far as single adjuster, in a perfect world all condominum claims (hurricane) would be handled by one adjuster. That adjuster would handle the Condo Association and all the individual 'owners'. Could you imagine going in and measuring everything or utilizing blueprints? One interpetation of documents, one set of pricing. If you have the Association, you can proceed with caution (slowly) while supplementing your income with all those individual 'owners'.
One can only dream, I suppose.
Oh yeah, not to mention the flood portion of the claim, also. |
Don
"To be held in the heart of a friend is to be a king."
Bruce Cockburn |
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KileAnderson
USA
875 Posts |
Posted - 02/09/2003 : 10:09:10
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Newt, I think you are missing the forest for the trees. If you get a good condo complex in florida you could do 3 inspections a day and bill for 9 and sometimes 18 inspections a day. (Condo unit owners policy, condo flood policy, association policy, RCBAP, FWUA for both the unit owner and condo association) That is assuming that each condo is a scheduled building and the exterior is covered by the Association policy and the interiors are covered by the unit owner.
I've never worked in Florida before, is it common for condo owners to have a FWUA policy and the association to have one too? |
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Newt
USA
657 Posts |
Posted - 02/09/2003 : 11:08:55
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Jim, I am sorry I got off topic, and thanks for clearing it up for me. I do have more questions concerning some of the older condos.They tend to get water damage during a windstorm. I know the storm has to create an opening before there is coverage, how ever some of the older windows or garden doors leak badly,especially jalousie windows. Is there alternative water damage coverage available ? I haven't found it in any of my policies unless caused by a covered peril
"Other Policies", as I understand it would be needed to see where the master policy started and the "agreement" would be needed to find out who was responsible for insuring what. Also there would be the assessment consideration. |
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KileAnderson
USA
875 Posts |
Posted - 02/09/2003 : 11:24:26
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| Newt, wind driven rain is covered for coverage A property even if an opening is not created. Coverage for contents is only available if there is an opening created by a covered peril. |
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Newt
USA
657 Posts |
Posted - 02/09/2003 : 11:31:33
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Hope you are right Kile if I ever work a condo.
I would sure like to work a small one first. Mainly because I don't know how fast I could do one.
This is new to me and I sure dread the day I get handed files, and I just don't have my confidence built up yet. After I help someone first I'm sure I will be OK. It may take a week or so. The main thing now is the paperwork.
HO6 is not a bad policy to understand, its the other considerations you have to deal with.
I didn't clarify the difference in the contents and property. I was only considering the condo owners coverage and lately there have been changes what the condo owners were responsible for, like the floors, ceilings and walls. They would be covered but the contents would not. I knew this and didn't do a good job explaining what I meant. |
Edited by - Newt on 02/09/2003 11:53:36 |
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CCarr
Canada
1200 Posts |
Posted - 02/09/2003 : 13:37:07
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In view of some of the concerns Newt has mentioned, that may be echoed by other new or newer adjusters; maybe I'll take a couple of steps back and approach CUO claims from the beginning.
In my opinion, CUO claims are an excellent source of income, a good place for a new or newer adjuster to 'cut their teeth', and a great place for an older (in age) adjuster and / or one getting gunshy on roofs or ladders - to stretch their longevity in this profession.
Simply stated, consider a CUO, as one of the easiest types of property coverage - first look at the CUO as a 'basic occupant' with personal property; but with three additional pieces of coverage, that could come into play, due to their unique style of ownership.
Now what is a condo? Black's Law Dictionary defines a condo as, "a system of separate ownership of individual units in a multiple unit building."
So, aside from the CUO having insurance to cover their personal property, the CUO has an insurable interest in the multiple unit building, subject to legislation, which can be jeopardized if it is not properly managed. Individual CUO's own their unit and have an interest in the 'common elements' which include - parking facilities, landscaping, halls and lobby, and recreational areas. While the CUO has an interest in these 'common elements' and the right of usage of them, the CUO does not own them.
However, to protect the CUO's interest in any of these areas, and any interest to 'changes' to their unit, or to mesh their insurance coverage regarding their unit to the condo association declarations; three basic additional types of coverage can be encountered, past the basic personal property coverage.
Now, the specific coverage wording I'll refer to, hopefully is a close cousin to your HO6, and is from our CUO wording. Certainly, I believe the intent is the same; but I will rely on others to point out any particular wording differences as deemed appropriate, if it steers away from the intent as you understand it.
First, again my belief is a policy should be considered from the beginning. Under "Definitions", "Unit" means the condominium unit, or exclusive portion described in the condo declarations, occupied by you as a private dwelling.
Now, the three additional types of coverage a CUO should have.
(A) Unit Improvements & Betterments - pretty basic, intended to cover aka 'changes' made to the unit, either from its original construction and finish, or that done by a previous owner, or that done by the current owner - i.e. made or acquired by the insured.
But, this is all subject to the condo docs, which when read and interpreted will fall at either end or within the two general extremes. First, as noted by Jim in the 'assessment thread' - 'docs provide that the condo association is responsible for all building components, including paint and coverings'; to the other end of that spectrum - 'docs provide that the condo association is responsible only to the unfinshed surface of building components'.
HO policies normally start with a set amount of this coverage ($5K ot $10K) that must be considered by the insured when establishing their condo insurance. That consideration is obviously based on what the condo docs say, and is then measured by what is found in the unit (acquired) or what the insured tends to do or has done (made by). I have been fascinated by this, in my early exposure to some ritzy condo areas, where I first thought it was a typo error when I saw $1,000,000 coverage for UI&B.
(B) Loss Assessment - this clause in our policies is almost the exact same wording as I see in the HO3;
(i) your share of a loss assessment
(ii) charged during the policy period
(iii) against you by a corporation or association
(iv) as a result of a direct loss to the property owned by all members collectively (aka the 'common elements')
(v) caused by a peril insured against in this policy
(vi) we do not cover loss assessments charged against you .... by a governmental body
However, the Canuck cousin goes one step further, which would close the door on Jim's latest 'assessment question', and says; 'we do not pay for that part of an assessment made necessary by a deductible in the insurance policy of the condo corp'. This gets away from the exact thing eluded to in Jim's assessment situation with Peter Piper, i.e. the condo corp facing a deductible from a covered loss in a unit, that because of the condo docs, the condo corp was paid under the master policy, and now the condo corp are likely billing the unit owner for the deductible.
Normal claims I have seen under the 'loss assessment' coverage, is where the master policy was inadequate to cover a loss to the 'common elements' (a prerequisite) due to a lack of sufficient limit or the application of a co-ins penalty.
Another thing to be careful with in this coverage item, that often really angers an insured, is that the insured as a CUO must have coverage in his HO policy for the cause of loss suffered to the 'common elements'; without that 'peril insured against' in the CUO policy; there will be no trigger to this assessment coverage.
(C) Unit Owner Additional Protection - this is the 3rd type of insurance a CUO should have to protect their interests. Normally, when purchased, the limit of this protection is 2.5 times the limit for personal property; but can be purchased for much higher limits, much with the same 'attitude' as someone would purchase a Personal Umbrella policy and calculate what they felt was an appropriate limit.
This UOAP coverage is the 'fail safe' coverage for a CUO, and his unit, when the condo corp has no insurance, the condo corp insurance is inadequate, or the condo corp insurance is not effective.
Since, there is coverage for the CUO improvements and betterments (item 'A', I noted), this UOAP excludes improvements and betterments to the CUO unit. Don't get confused, this is a fail safe coverage if the condo policy fails and won't provide coverage for the unit as required by the condo docs. The 'improvements and betterments' are covered under (item 'A' noted) but the unit as a whole, except for those I&B's, is covered under this section (UOAP); if the condo corp policy is inadequate, ineffective, or does not exist. Basically, its just an internal coding thing for carriers, in the very rare instances that both (items 'A' & 'C') are triggered.
So, in summary, there are four basic property parts to a CUO policy;
(1) personal property
(2) unit improvements & betterments, for the unit only, guided by the condo docs
(3) loss assessment coverage, only applicable to the 'common elements'
(4) unit owner additional protection, for the unit only, other than I&B, when the master policy fails to respond or adequately respond
This is a great source of revenue, and easy on the body. If approached by an adjuster - new, newer, or otherwise - by studying the four components of the property coverage, recognizing the critical role the condo docs play in setting the template for coverage, and organizing an approach to this type of claim; it can be a rewarding experience. |
Edited by - CCarr on 02/09/2003 13:41:57 |
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Newt
USA
657 Posts |
Posted - 02/09/2003 : 15:53:36
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I was reading some time ago about coverage for shutters or blinds on balconys where a roof is involved. If the blinds or shutters are intalled inside the posts, they are considered betterments.
outside the supports or posts they are considered part of the outside wall and would have to be covered under property "A". I believe this was under the FWUA program.
Clayton you changed the whole picture for me. I'll print your post out and put it in my CONDO info.
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How To Handle The HO-6 Condo Unit Owners Claim
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