Insurance–Claims Letter

Insurance–Claims Letter

Claim Letter Triggers Notice To Insurer!

By Michael J. Gelfand, Esq. / Published February 2021

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Your association receives a demand letter. A claim is asserted against the association and perhaps the directors. When the incident occurred, you did not think much of it, if you even remember the incident. What do you do about the demand letter? Do you “blow it off” and ignore it? 

     Ignoring, as well as ignorance, is not a defense, as you may have heard. Ignoring can be very damaging to your association and perhaps you. Proverbially placing the demand letter in the back of a desk drawer may result in a loss of insurance coverage for the claim. 

     Recently, a Florida appellate court ruled that an insured was not entitled to insurance for defense costs because a claim was not made within the policy’s claim period. The facts in Field v. Certain Underwriters at Lloyd’s, 45 Fla. L. Weekly D 2172 (Fla. 4th DCA, September 16, 2020), indicate that Field, an accountant with a large accounting firm, came under government investigation from 2000 through 2003 for abusive tax shelters. Field resigned from the firm in 2003 and was charged criminally in 2009. 

     In 2013, Field was acquitted of all charges. Four years later, Field made a claim to the firm’s insurer seeking indemnification for defense costs, which he incurred in 2009–2013. The insurer denied the claim, resulting in Field filing a complaint against the insurer. The trial court found that the firm’s insurance policy did not allow for recovery of the defense costs for the criminal prosecution, which ended over four years earlier, and granted judgment for the insurer. 

     The Florida appellate court agreed with the trial court, determining that the insurance policy did not provide coverage for Field’s defense costs. The appellate court observed that the pol-icy provided that the insurer will indemnify the insured against loss arising from a claim first made against the insured during the policy period. Further, the policy stated in all capitals: “THIS IS A CLAIMS MADE POLICY WHICH APPLIES ONLY TO CLAIMS FIRST MADE DURING THE POLICY PERIOD.” The policy period was June 1, 2017, to June 1, 2018. Because the “claim” giving rise to the indemnification was not made during the policy period, as well as the expenses sought to be indemnified, there was no valid claim for indemnification on this policy. 

     This case highlights the importance for Florida associations to provide timely notice of claims to insurers and to know what triggers the duty to provide notice. Of great consequence, directors’ and officers’ liability policies provide that claims must be made within the policy claim period.

     Beyond this case and the focus on insurance, many Florida association governing documents contain indemnification provisions to protect officers and directors. If an insurance policy does not cover expenses, an officer or director may be able to bring a claim against the association for defense expenses not covered by insurance!

     So, what do you do when you receive a claim in Florida? Normally, it will be important to put your insurance carrier on notice as soon as possible! Failure to do so can be very costly. Contact your association’s counsel immediately to avoid the perils of being denied coverage. 

Claims (More of Them): Releases—Settlement Documents Help Protect Against Another Claim

  It rains in Florida. It rains a lot in Florida. So, what is new? We have gotten used to roofs leaking, at least occasionally. Combine leaking roofs and a Florida association, and what do you get? It is not a joke because invariably the two result in legal claims.

     How does a Florida association protect itself from continuing claims cascading like water through a leaky roof? A recent Florida appellate court addressed how documentation may help the situation, at least to avoid a second claim. 

     In Escadote I Corporation v. Ocean Three Condominium Association, Inc., 45 Fla. L. Weekly D 2267 (Fla. 3rd DCA, October 7, 2020), the owner of a condominium unit sued the condominium association, the condominium’s developer, and others in 2006 for water damage from a leaky roof. In 2010, the association and owner settled the lawsuit for $375,000 in exchange for the owner’s release of claims against the association. 

     The settlement did not stop leading the owner to file a second lawsuit, this time against the association, the association’s board of directors, and the association’s manager in 2014. The trial court granted summary judgment for the defendants, finding that the release signed by the owner in 2010 barred the claims.

     The Florida appellate court affirmed the judgment for the defendants. The appellate court analyzed the release and found that it was written to bar claims resulting from property damage that existed before 2010. The new, second lawsuit alleged continuous water intrusion to the same damaged roof that was the subject of the 2010 release. Because the new claims arose from the same damaged roof, the new claims fell within the scope of the 2010 release, and the release barred the claim. 

     This case can be applied by Florida associations when faced with claims for not only water damage but also other types of damages. Traditionally, releases were looked upon with disfavor because releases were used to prevent a rightful recovery. Nevertheless, the lesson of this case is that releases can be enforced with proper drafting and the right circumstances, and when settling a claim it is important to properly document the settlement, including a properly worded release to help protect against another claim for the same issues.

Michael J. Gelfand, Esq.

Senior Partner, Gelfand & Arpe, P.A.

     Michael J. Gelfand, Esq., the Senior Partner of Gelfand & Arpe, P.A., emphasizes a community association law practice, counseling associations and owners how to set legitimate goals and effectively achieve those goals. Gelfand is a dual Florida Bar Board Certified lawyer in Condominium and Planned Development Law and in Real Estate Law, Certified Circuit and County Civil Court Mediator, Homeowners Association Mediator, an Arbitrator, and Parliamentarian. He is a past Chair of the Real Property Division of the Florida Bar’s Real Property, Probate & Trust Law Section, and a Fellow of the American College of Real Estate Lawyers. Contact him at or (561) 655-6224.