Condo Claims
Hello,
Our HOA doesn’t mention to us how much deductibles are for the insurance policy. A lot of us have mortgages and the loan lender wants proof of insurance each year – do we have to ask every year? I found in 33-1253 that unit owners can ask for the certificate – ok, fine … but can’t the HOA or management company provide it like they would other information (meeting info, bylaws, community notices). We’re just wondering if we don’t know how much to save personally if we have to file a claim it doesn’t seem fair. Also, since the condo policy for the entire place is for entire place, why does one person have to pay a deductible because say for instance their home happened to be next to a HOA tree that fell on their car?
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PJ,
The law has a specific statute relative to Condominium insurance policies. The statute is ARS 33-1253, and I strongly suggest that every condo owner read and understand the content of that statute. It established that every condominium owner is insured under the policy, but the association is responsible for paying the deductible. It also requires that the association inform each owner annually of the insurance deductibles and all property and liability coverage. This mandate does not require any owner to request the information. Each owner has the right to submit a claim for damages under the association’s insurance policy subject to a process defined in the statute. Some declarations allow the associations to charge the individual for the repair and upkeep of common elements serving their unit alone. in those cases, an insurance claim for that repair would be the unit owner’s responsibility. Any damage caused to common elements by the actions of an individual owner could be assessed to the unit owner who caused the damage.
This relatively large section contains essential information on the rights of every condo owner and the association’s responsibilities. Many, if not most, associations will not tell you the truth this statute requires and will try to deny insurance claims or responsibility for common element failures and resulting unit damage.
Knowledge is power, and the statute is in place for this exact reason.
Dennis
Thanks! I did some more reading. Our CC&R section for “Insurance” doesn’t mention homeowners have to pay for upkeep of common elements that serve our own unit. But, we would have to pay for any repairs to other units or to common or exclusive elements if we cause damages (makes sense). Our “Rules and Regulations” say that our insurance policies and deductibles change from time to time (which makes sense that our HOA tells us each year about that). The R&R’s also say that “You should periodically ask the Association for the current deductible amount to ensure that you are aware of the amount (as the Association does not routinely send notice when the deductible changes).” Also, “Please refer to Article XI of the Declaration and check with your insurance agent or carrier to ensure you obtain the correct type of insurance, including coverage for the improvements and personal belongings in your unit AND the Association’s insurance deductible.” So, that doesn’t match up with the statute like you mentioned. Should the HOA fix the Rules & Regulations?
PJ
The law supersedes anything in the governing documents. Because the governing documents contradict the law is no excuse for the association to ignore the law. They must supply every unit owner the details of all policies of the association and the deductible amounts for each policy.
Dennis
Sorry, what I meant is it makes sense why HOA should tell us each year about the deductible amounts and coverage (but they don’t, they tell us WE should ask).
So 33-1253 K 1. reads “The unit owner’s responsibility for the associations’ insurance deductibles for all property and liability coverage” – does that mean only if we cause damages is when an owner would pay deductible, but otherwise the Association is responsible for paying deductibles? I want to make sure I understand!
Our Rules & Regulations and a memo we got say the property manager will decide if a homeowner claim should be sent to the insurance company – does the board have a say or only the property manager? The law says “association” will decide to report the claim or not – so wouldn’t the board be involved in the decision too? Thanks.
PJ
The responsibility for everything related to any condo lies with the board of directors. The community manager has no authority to do anything unless the board assign them that responsibility. The law is always written to place responsibilities on the board directly if the association has their manager do things they are still ultimately responsible to make sure that the law is complied with. if the community manager screws up like what happens most of the time the association is liable for all their actions. Property managers have absolutely no authority to do anything under this statute. While the law allows the association board to decide if they will make a claim that decision is not final and does not diminish the ability of any unit owner to file a claim with or without the board approval. Read the statute carefully all of these points were debated and clarified when this law was last modified in 2023. I was directly involved in the development of the current language
Dennis
Thanks! I read the bit under “Legislation” regarding HB you helped write. I may understand better now:
1. the association gets insurance policy/policies (per statute and CC&Rs)
2. the association pays for insurance policy/policies (basically thru monthly assessments)
3. the association is required to tell owners each year of the master policies, deductible amts.
4. the annual notice is meant to inform owners of the type of coverage in place & deductibles – so they can have their own insurer add coverage for any possible deductibles amts. owed)
5. the association pays for the deductibles when an accepted claim is made (cost shared among all owners?)
6. the homeowner only pays for association master policy deductible if they directly cause a claim
You’ve got it.
Hi, again. I notice that HB-2251 is for Condos. What is difference between Condo and HOA when it comes to insurance? I want to make sure I am applying the law correctly to a friend’s situation.
My friend owns in “_____ Homeowner’s Association, Inc.” (to be discreet) and just got a letter about the new association policy (law followed, yay). The letter said the association master policy covers (exterior buildings, studs out, roof, countertops etc.) but doesn’t cover (improvements, upgrades, personal items). Sounds normal. But the deductible went up from $5k to $25k. What would cause such a jump? Also, the property manager said that Unit owner(s) pay for those covered items that fall below the $25k master policy deductible. This doesn’t make sense compared to what I learned the law to say. The letter does say that owners should get their own policy to cover items that fall below the master policy deductible of $25k. Does ARS 33-1253 also apply to HOA’s?
The statute that we are talking about only applies to condominiums. The difference between a condominium and an HOA is that in a condominium the unit owners share ownership of all the common property. In an HOA the association owns the common property. The insurance deductible is a common expense to be shared by all homeowners in both community types. The individual homeowners in a condominium are never responsible to individually pay for insurance deductible unless they directly caused the damage from the claim.
Dennis