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tsgarp
USA
1 Posts |
 Posted - 01/31/2003 : 18:45:02
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| Question: Insured has $1000.00 assessment coverage. he becomes aware that there is going to be a $60,000 assessment on his condo complex for numerous issues-some covered, some not. He calls the insurance company and raises the assessment to the $50,000.00. No questions are asked-it is just raised mid-term. He then receives the assessment 4 months later looking for $51,000.00. The policy covers assessments based on time received. But something just is not right about this scenario-no misrepresentations were made. Possible defenses?? |
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JimF
USA
1014 Posts |
Posted - 01/31/2003 : 18:57:30
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Let's clear the air here first by asking what you mean by assessment?
If a condo association decides to pave the condo common area parking lots, or refurbish a club house, build a swimming pool, or reroof all the condo units, the condo association might well ask for and require an assessment against each condo owner and unit. BUT, this type of assessment is not covered by insurance.
If, on the other hand, the condo association experiences a $100,000.00 covered loss to condo association common property under a condo master policy which has a $25,000.00 deductible, and there are 100 condo unit owners, then the HO-6 would pay the unit owner's assessment for his portion of the master policy deductible ($25,000.00/100=$250.00) subject to the HO-6 policy provisions.
I am suggesting that your insured as well as perhaps yourself are not reading and understanding the HO-6 assessments coverage provision and what it means and covers as well as doesn't cover. |
Edited by - JimF on 01/31/2003 19:06:43 |
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Newt
USA
657 Posts |
Posted - 02/01/2003 : 08:04:35
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Could it be that there was claim assessment of $50,000 and a deductable share of $1000 in this scenario? By-laws of the association would have to be considered in conjunction with the claim.
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dbencat
USA
3 Posts |
Posted - 02/03/2003 : 08:35:48
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| I agree with the prior stated analysis of what the assessment provision provides for. You state no misrepresentation. I would suspect, that if you are able to document that the insured was aware of the upcoming assessment and failed to advise the carrier, underwriter or agent at the time of the requested increase, that you may indeed have a material concealment. The insured is required to provide all information know to him in acquiring insurance. This is material information in my opinion, but would need a legal review. |
David P Bennett |
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ckleisch
USA
46 Posts |
Posted - 02/03/2003 : 13:02:04
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If I may interject another thought on the claim being handled. Initially, we assume you have a claim file, claim number and a loss accord with the loss facts stated. First place I would recommend going is to the underwriting file or underwriter and getting a copy of the original application its history to date of loss and any new application filed for increase in coverage. Copy envelope from mailings. Second interview agent as to discussions on coverage being increased. what was reason given as premiums and payments are going to jump considerably. Third any assesssment will have to be in writing stipulating the cause. Same, usually is in agents file for his records to avoid E&O. Is it there? What was mailing date and app. date? If insured did not tell agent/company underwriter of impending assessment he may have committed mail fraud. No good underwriter will do a $49,000 limit increase without documentation. At least and keep his job come audit time. Read language of policy carefully as to subject of policy implementation carefully. Is there any exclusions involved as to loss and inception period? Is the form an HO-6 or is it a different form like a LLoyds manuscript policy. I agree something just doesnt sound right?
As to settlement of the claim once decision made. Time on decision is critical. JIM F has hit settlement on the head as to requirements and procedure. Do you think Non-waiver would be in order at onset? |
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CCarr
Canada
1200 Posts |
Posted - 02/05/2003 : 18:39:13
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Art, considering your opening post; there are defenses to the actions of the insured which you have relayed to us.
The following is a quote from a published article, from June 1990; I am the author.
" .... A contract of insurance is a specialized and highly formalized contract. There is no other type of contract that has been so extensively fashioned and refashioned by both the legislature and the courts. An insurance policy as a contract is what is known as a contract uberrimae fidea - a contract of the utmost good faith.
This principal was developed as far back as 1766 in England in the landmark case of Carter vs Boehm. That case was for the benefit of a policy the Governor of Fort Marlborough, and was to provide coverage against loss in the event that the fort was captured by a foreign enemy. One year later, the fort was captured by the French. The insurer resisted payment on the grounds that the government had been guilty of a fraud by concealing circumstances that ought to have been disclosed, namely the weakness of the fort and its vulnerability to attack by the French.
The words of Lord Mansfield in 1766 are even more important to all of us now and should not be limited to dealings in insurance. They have survived the test of time for over 200 years:
' .... (old english, as per the original ruling) insurance is a contract upon speculation. The special facts upon which the contingent chance is to be calculated lie most commonly in the knowledge of the insured only; the underwriter trusts to his representation, and proceeds upon confidence that he does not keep back any circumstances in his knowledge to mislead the underwriter into the belief that the circumstance does not exist, and to induce him to estimate the risk as if it did not exist. The keeping back of such a circumstance is a fraud, and therefore, the policy is void. Good faith forbids either party from concealing what he privately knows to draw the other into a bargain from the ignorance of that fact and his believing the contrary ....'
The principal of the utmost good faith is not difficult to discern; it is designed to equalize the bargaining position between those who know and those who do not know."
Hopefully Art, you can see the applicability of this principal to the scenario you presented. |
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Newt
USA
657 Posts |
Posted - 02/06/2003 : 06:31:29
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You would need all documents from the Condo org to the insured related to coverage.
When damage was discovered from (Condo Owners Assn.)
When they notified the insured.
Copy of By-Laws.
Copy of Damage Assesment.(By Condo Assn. Insurer) w/date
Add to claim in notes items not covered.
Copy of Condo Assn Policy
If the carrier requires your estimate of total damage, do it.
As I see it this would be a paperwork claim and an investigation. Gather every shread of evidence for your file and give it to the carrier. It would be up to the carrier claims dept to deny , turn it over to the investigative unit, or pay the claim. Let the insured know that this claim will be resolved by the insurer and you are not impowered to approve a claim.
This is my opinion, so consider the source.(Student of the "ONE ROOM SCHOOL".)
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JimF
USA
1014 Posts |
Posted - 02/08/2003 : 21:58:18
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Ok, now let's stay with this same assessment topic but change the loss scenario slightly, to glean more depth of understanding of coverage provisions within the HO-6 while also involving a Condo Master Policy.
Peter Piper has a covered water damage loss in his Newton Arms Condo unit and reports the loss to his condo association. The condo association reports the loss to the Master Policy carrier. An investigation follows and damages are agreed to be $5,000.00. The Newton Arms Condo Association documents provide that the condo association is responsible for all building components, both exterior and interior, including paint and coverings.
The Master Policy carrier pays the loss of $5,000.00 less the master policy deductible in the amount of $1,000.00.
The insured has an HO-6 with a $500.00 deductible and under that policy, this loss would have been a covered loss.
Now, here's the question: Can the insured Mr. Piper report this loss to his carrier, and receive $500.00 for his loss NXS of his $500.00 deductible (to off-set the $1,000.00 deductible portion of his loss)?
Please share your thoughts so others may learn. |
Edited by - JimF on 02/08/2003 22:15:14 |
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Dadx9
USA
143 Posts |
Posted - 02/08/2003 : 22:10:06
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I guess my first thought would be, "why would Peter Piper be concered with the Master policy deductible?" I would imagine Peter would have a provision that the deductible would be passed on to him?
My second thought would be, "If the Comdominium documents state that all interior and exterior items are subject the association carrier, how would this be a 'covered loss'?"
My initial thought (with the information provided) would be there is no coverage for the deductible. But, I am certainly open to correction.
Don |
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CCarr
Canada
1200 Posts |
Posted - 02/08/2003 : 22:45:16
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No, I don't think Peter Piper can get a net $500. out of this situation as Jim presented. My answer is less than categorical only because I do not have an HO6 to read, however you eluded to it in your 1/31 post.
I am satisfied that the intent of all HO "Loss Assessment" wordings, is to consider assessments arising from damage to the common elements only of a condo, i.e. 'owned by all members collectively'; much as you have laid out in the 2nd example of your 1/31 post.
With the 'invention' of condominiums, some 25 or 30 years ago, current policies at the time were inadequate for condo unit owners, especially with regards to their 'insurable interest' in the common elements of the structure.
While wordings with some difficulty were created and modified to deal with early overlapping coverage concerns between the unit owner and his unit, versus the condo act, condo docs, and the building master policy; there was an initial gap in coverage for 'shock losses' to the condo building and its association; again as per Jim's 2nd example stated - prior to the creation of "Loss Assessment" coverage.
"Loss Assessment" coverage was designed to fill that gap. |
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JimF
USA
1014 Posts |
Posted - 02/08/2003 : 23:35:46
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Don, my suggestion and point in saying it was a 'covered loss' under both policies is because the water damage was a peril insured against under both policies.
I further suggest 'coverage' in the sense that the loss could/would have been paid by the HO-6 carrier fully had the condo documents been written differently.
Under HO-6 claims where a Condo Master Policy is involved (a Condo Master Policy could I suppose be absent for various and sundry reasons, but I have never encountered nor heard of such an event), while losses are commonly apportioned per the condo documents, is it also fair to say, that one policy could be considered primary and the other excess?
To further clarify, the $1,000.00 deductible under the Condo Master Policy was the responsibilty of Peter Piper, the only unit owner suffering damage under this claim.
This is a very real claims scenario which happened this week in Greensboro, and several adjusters were consulted for their policy interpretation opinion. I'll share those opinions as well as how the carrier interpreted the HO-6 policy later, after everyone has had a chance to weigh in.
Given those clarifications, now what's your opinion? |
Edited by - JimF on 02/08/2003 23:38:52 |
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Dadx9
USA
143 Posts |
Posted - 02/09/2003 : 08:17:44
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I'll ponder that some more. My initial response would be coverage and a $500.00 settlement. But something tells me Peter may be able to recoup all $1,000.00.
I'll be back this afternoon. |
Don
"To be held in the heart of a friend is to be a king."
Bruce Cockburn |
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Assessment
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