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  1. #1
    goodbirdie is offline Member
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    Fire in Condo, HOA says won't file claim on Master Policy

    What is the name of your state (only U.S. law)? CA

    I had a fire in my condominium which started in my clothes dryer within my unit. There was nothing blatantly faulty with the dryer, the fire department's report labeled the fire unintentional, and my own condo owner's insurance's fire inspector took the dryer away to see if they could determine the cause. He said preliminarily that it didn't appear that there was a build-up of lint in the back or venting hose of the dryer.

    Interior of my condo is a total loss (my condo owner's insurance's words). All of my possessions a total loss, which of course is covered under my own insurance. The homeowner's association holds the Master, or Blanket policy on the condominiums and according to my own insurance, they would be considered the primary for rebuilding/reconstructing the interior of my condo - the ceiling, floor, walls, cabinets, and built-ins (dishwasher, stove), plumbing, electrical, etc. The only structural damage was to a roof truss, damaged by the firemen when they were ventilating the attic.

    I contacted our property management company, who told me to call the HOA's Master Blanket policy holder. When I called them, they told me the HOA "wasn't going to file a claim for my condo." When asked how or why they could decide such a thing, they were evasive. Then one of the board of directors of the HOA called me to tell me (basically) how misinformed I was, that the blanket fire/casualty insurance wouldn't cover the damage to my unit which was basically just my own interior ceiling, walls, floors, built-ins, cabinets, etc. none of which were "improvements" upon the original, existing condo unit.

    When I asked the board member to please put that decision of the HOA's not to file a claim on the master blanket policy in WRITING, a got a lot of hemming and hawing. I also asked the Property Manager to put the decision in writing. He also hemmed and hawed. After a few days, the Property Manager called me and told me they were ready, willing and able to start getting estimates on reconstructing my condo.

    In the CC&R's, unit owners are PROHIBITED from having their own fire/casualty insurance on their units; they are encouraged to have insurance on their possessions and their own individual liability insurance.

    What's going on here? How did they go from "not our problem" to "we're ready, willing and able to get started . . ." As far as I know, since we all get our mortgages approved based on the fact that the HOA has blanket fire and casualty insurance on each of our units, and we are prohibited from having our own, individual fire/casualty insurance, the HOA's master policy always WAS responsible for rebuilding my condo.
  2. #2
    JETX is offline Senior Member
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    Simple answer.... it really doesn't matter if the HOA insurance pays or not... your insurance will end up paying.

    Your insurance covers YOUR property. That means your contents AND everything one the interior surface of the 'common' structure (sheetrock, plumbing, electrical, etc.). Any damage that occurred to the 'common structure' could be covered by the HOA insurance (if any)... but then the HOA insurance company would likely pursue recovery for their 'damages' (expenses they incurred) against YOUR insurance company.
  3. #3
    goodbirdie is offline Member
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    But HOW when the CC&R's PROHIBIT individual unit owners from having their own fire and casualty insurance?
  4. #4
    justalayman is offline Senior Member
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    just can't see how they can effectively prohibit you from purchasing such insurance.

    and if they actually have such a prohibition is the CC&R's look into suing them for not allowing you to purchase what every other condo assoc allows, or actually in many cases, requires you to purchase to cover your liabilities.

    Honestly, I can't imagine an HOA making any such demand.

    Hold on here. I just re-read your original post. This statement:

    In the CC&R's, unit owners are PROHIBITED from having their own fire/casualty insurance on their units; they are encouraged to have insurance on their possessions and their own individual liability insurance.
    the interior of your condo is your liability as well as if your actions cause damage to another unit, you have liability there as well.

    I believe you may be misunderstanding of your CC&R's.
  5. #5
    goodbirdie is offline Member
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    justalayman, how am I misinterpreting? I'm really trying hard to understand.

    Are you saying drywall, ceilings, etc. are "my personal possessions" to be covered by my individual condo owner's insurance? My insurance company certainly doesn't believe so. They're only covering my furniture, clothing, jewelry, linens, dishes, etc.
  6. #6
    goodbirdie is offline Member
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    Is there some kind of "insurance black hole" as to who covers the interior "structure" of my condo?
  7. #7
    goodbirdie is offline Member
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    The CC&R's state "Section 12.02. Fire and Extended Coverage insurance. The Association shall also obtain and maintain in force a master or blanket policy of fire insurance for the full insurable replacement value, without deduction for depreciation, of all of the improvements within the Project. Such policy and any endorsements thereon shall be in the form and content for such term and in such company as may be satisfactory to any Institutional Mortgagee; and, if more than one Institutional Mortgagee exists, such policy and endorsements shall meet the maximum standards of such Institutional Mortgagees. Such policy shall contain extended coverage and replacement cost endorsements, if available, and may also contain vandalism and malicious mischief coverage, special form endorsement, stipulated amount clause and a determinable cash adjustment clause, or a similar clause to permit cash settlement covering full value of the improvements on the Project in the event of destruction of improvements and a decision not to rebuild pursuant to the Article herein entitled "Destruction of Improvements." Such policy shall be in such amounts as shall be determined from time to time by the board, shall name as insured the Association, the Owners, and Declarant, so long as Declarant is the owner of any of the condominiums, and all Mortgagees as their respective interests may appear, and shall contain a loss-payable endorsement in favor of the Mortgagee."

    Then later it says,

    "Section 12.08 Individual Casualty Insurance Prohibited. Except as expressly provided in Section 12.09, no Owner will separately insure his Condominium or any part thereof against loss by fire or other casualty covered by any insurance carrier under Section 12.02."

    "Section 12.09 Rights of Owners to Insure. Notwithstanding the other provisions of this Article, an Owner shall be permitted to insure his personal property against loss by fire or other casualty and may carry public liability insurance covering his individual liability for damage to persons or property occurring inside his individual Condominium Unit."

    So, are we saying drywall is my "personal property?" Isn't that a little ludicrous? Who moves into a place, carrying their drywall and ceilings under their arms to tack up. Then remove same, tuck under their arm, and move out?
  8. #8
    justalayman is offline Senior Member
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    Quote Originally Posted by goodbirdie View Post
    Is there some kind of "insurance black hole" as to who covers the interior "structure" of my condo?
    No, what I am saying is this is an unusual situation. Most condos require the owner to be liable for the interior (private) areas of their condo and the blanket policy covers common areas.


    Without reading the CC&R's in their totality and basing it on the sections you have posted, it does seem the HOA is liable to carry insurance on all improvements to the property.

    btw; the building itself is an "improvement".

    Since they have since changed their original position and are now covering the damage, I would suspect they were not aware of the situation and believed the coverage to be a typical condo insurance plan where your unit would be covered by your own insurance. They had apparently reviewed the policy and discovered they were in fact liable for the costs to repair.

    Maybe we will never know.
  9. #9
    goodbirdie is offline Member
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    Thanks, justalayman, for clarifying for me.

    It's so strange that . . . ask 20 people about this situation - people who are in law, insurance, and real estate - and 10 of them adamantly state that I am responsible for rebuilding the interior of my condo, and 10 of them will adamantly insist that the HOA's blanket insurance is responsible to rebuild my condo. I wonder why it's so confusing?

    All I know is . . . if I am responsible for rebuilding the interior, then I have indeed been caught in an insurance "black hole" and I'll just have to have the city condemn the property. There must be $100,000+ in damages. Basically the whole interior is gone - just the outside structure (shell) left.

    Answers appreciated!
  10. #10
    justalayman is offline Senior Member
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    but didn't you post:
    After a few days, the Property Manager called me and told me they were ready, willing and able to start getting estimates on reconstructing my condo.
    Of course you did. I copied and pasted to put it here.

    Anyway, what is the problem if the PM is going to rebuild the condo?
  11. #11
    goodbirdie is offline Member
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    The problem is, I guess, that since the HOA said originally it wasn't their responsibility, I'm waiting for them to say again that it isn't their responsibility and I'll have to pay $XXXXXXX. Should I get an attorney to completely review the CC&R's to get a "for sure" answer? So far, everything seems to be "oral" and nothing given me in writing. I'm just afraid at the end of it all, I'll be left holding the bag. In which case I guess I'd have to file bankruptcy or something.
  12. #12
    justalayman is offline Senior Member
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    hiring an attorney would be a good idea.
  13. #13
    HomeGuru is offline Senior Member
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    Quote Originally Posted by goodbirdie View Post
    What is the name of your state (only U.S. law)? CA

    I had a fire in my condominium which started in my clothes dryer within my unit. There was nothing blatantly faulty with the dryer, the fire department's report labeled the fire unintentional, and my own condo owner's insurance's fire inspector took the dryer away to see if they could determine the cause. He said preliminarily that it didn't appear that there was a build-up of lint in the back or venting hose of the dryer.

    Interior of my condo is a total loss (my condo owner's insurance's words). All of my possessions a total loss, which of course is covered under my own insurance. The homeowner's association holds the Master, or Blanket policy on the condominiums and according to my own insurance, they would be considered the primary for rebuilding/reconstructing the interior of my condo - the ceiling, floor, walls, cabinets, and built-ins (dishwasher, stove), plumbing, electrical, etc. The only structural damage was to a roof truss, damaged by the firemen when they were ventilating the attic.

    I contacted our property management company, who told me to call the HOA's Master Blanket policy holder. When I called them, they told me the HOA "wasn't going to file a claim for my condo." When asked how or why they could decide such a thing, they were evasive. Then one of the board of directors of the HOA called me to tell me (basically) how misinformed I was, that the blanket fire/casualty insurance wouldn't cover the damage to my unit which was basically just my own interior ceiling, walls, floors, built-ins, cabinets, etc. none of which were "improvements" upon the original, existing condo unit.

    When I asked the board member to please put that decision of the HOA's not to file a claim on the master blanket policy in WRITING, a got a lot of hemming and hawing. I also asked the Property Manager to put the decision in writing. He also hemmed and hawed. After a few days, the Property Manager called me and told me they were ready, willing and able to start getting estimates on reconstructing my condo.

    In the CC&R's, unit owners are PROHIBITED from having their own fire/casualty insurance on their units; they are encouraged to have insurance on their possessions and their own individual liability insurance.

    What's going on here? How did they go from "not our problem" to "we're ready, willing and able to get started . . ." As far as I know, since we all get our mortgages approved based on the fact that the HOA has blanket fire and casualty insurance on each of our units, and we are prohibited from having our own, individual fire/casualty insurance, the HOA's master policy always WAS responsible for rebuilding my condo.
    **A: you need to file a claim with your own insurance company and that company will subrogate against the HOA insurance co. who holds the master policy.
  14. #14
    LindaP777 is offline Senior Member
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    When you talk to your insurance company, what did they tell you?
  15. #15
    HomeGuru is offline Senior Member
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    Quote Originally Posted by LindaP777 View Post
    When you talk to your insurance company, what did they tell you?
    **A: yes, that's the key to this post.
    Last edited by HomeGuru; 04-13-2009 at 11:54 AM.

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