Q: Do I have options if our Association's storm damage claim is denied?

A: Yes! The most common next step if your loss coverage amount is not sufficient to cover the loss of your claim, if denied, is to go to Appraisal.

Q: Our storm damage claim was denied. Should the board initiate a lawsuit?

A: A lawsuit in one option in this situation, but many times lawsuits are a costly and time-consuming process. A more efficient way to resolve this kind of dispute is to begin the Appraisal process.

Q: What is Appraisal?

A: Appraisal is an insurance policy provision found in the Loss Settlement section of your policy. It takes the place of a lawsuit and is invoked when there are disagreements between the policy carrier and the policy holder regarding the amount of loss.

Q: How is our Association's amount of loss determined?

A: Your insurance adjuster will determine the amount of damage and what your coverage allowances will be in the event of a loss.

Q: Does our Association's policy cover storm damage within individually owned units?

A: Typically, no. An Association’s policy will generally cover damage from the “studs out”. This means, property outside of individually owned units is covered under the Association’s policy. The roof, the siding, and common areas would be covered by the Association. However, water damage incurred within a unit due to a storm event where the roof was damaged may not be covered by the Association’s policy. Your governing documents would specify who covers that.

Q: Do homeonwers within our Association need their own insurance policies?

A: Yes! Damage and property loss may not be covered by the Association’s policy. Therefore, an HO6 policy would be necessary to cover those losses. We always advise that your HO6 policy insurance agent discuss this further with your Association insurance agent so no lapses of coverage exist and you are fully aware of what your deductible is.

Q: How is the value of my insurance claim determined?

A: The insurance industry generally uses a software called Xactimate to value all claims. Approximately 90% of property claims are written using Xactimate. Xactimate is owned by an independent company called Xactware. Xactimate has specific pricing by region, for example, Minneapolis, MN. There are over 400 pricing regions in Xactimate. This is done to ensure the price is fair and accurate for a specific region in the country. Xactimate is in effect a very robust estimating program. The software has over 18,000 specific material selections in it, for example, shingle types, siding, painting, etc. Furthermore, the pricing in Xactimate is updated every month to reflect accurate market pricing. Most insurance companies have adopted Xactimate because it is considered accurate and fair. Your insurance adjuster will create the scope of damage (estimate) in Xactimate.

Q: Is the pricing in Xactimate fair?

A: The short answer is yes. The majority of insurance companies and contractors agree that Xactimate is fair. This is why it has been so widely adopted.

Q: Do I need to get bids for my insurance claim?

A: No. Xactimate is designed to provide a reasonable and fair estimate for the damage sustained to your property. When the insured gets bids, it generally only benefits the insurance company as it serves to save them money. If your bids come in below the insurance company estimate, the insurance company will likely lower your claim to the value of the lowest bid. If the bids come in over Xactimate, the insurance company will generally pay out the Xactimate amount. Getting bids can put the insured in a situation where they are forced to use the lowest bid, which may not be in the insured’s best interest. For this reason, we recommend letting your General Contractor work with the insurance adjuster to determine the repair estimate in Xactimate.

Q: Can I profit from an insurance claim?

A: Most policies require the insurance company to return your property to its pre-event condition. The insurance company is not required to return your property to its pre-event condition and give you a financial windfall. There are specific exceptions to these situations. However, they have to be handled very carefully to ensure the insured does not commit insurance fraud. Our advice is to seek a legal opinion from a competent insurance lawyer before trying to achieve a financial gain as a result of an insurance claim. Furthermore, in the case of a large loss claim, over $100,000, the insurance company is going to require the insured to provide proof that the work was completed prior to releasing the final funds. Proof of work generally consists of the following; the signed contract with the general contractor, copies of check stubs paid to the contractor to date and photos of the completed repairs. This is standard practice on large loss claims. Insurance companies require this information to ensure insurance fraud is not occurring.




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