K.I.S.S. Your Insurance Claim

K.I.S.S. Your Insurance Claim

By Luis A. Mena, Esq. / Published December 2020

Photo by iStockphoto.com/Moostocker

One of the most distressing issues that can confront an association’s board of directors and its members is what happens when they suffer a catastrophic event such as a fire, hurricane, tornado, or the like that causes damage to the common elements of the association. Not only does the board have to act quickly to deal with the actual event, but they also have to address the immediate and long-term needs of the association. The board does this while navigating the mine field that is their insurance claim and having to follow those duties and restrictions imposed upon them by the association’s governing rules and restrictions. This is not an easy task, and frankly, many associations struggle with keeping all of these balls in the air at once. It is, however, doable provided the association follows the old adage, K.I.S.S.—keep it simple, stupid.

Kiss: Not the Band But The Principle

     K.I.S.S. is a design principle noted by the U.S. Navy in 1960. K.I.S.S. became truly popular in the ‘70s and states that designs and/or systems should be as simple and straightforward as possible. As such, complexity should be avoided in a system whenever possible as simplicity almost guarantees the greatest levels of user acceptance, efficiency, and interaction.

     In other words, K.I.S.S. means don’t overcomplicate the matter as doing so will only make things that much harder.

What should you do first?

     The first thing that every association should do is stop the damage from becoming worse. You’re probably thinking, well, of course you have to stop the situation from becoming worse! But remember, this is K.I.S.S., and in all honesty, most boards simply don’t know that they should do that first.

     Many times I’ve seen an association call the wrong person while the event—particularly during fires—is happening. The first thing you should do is take whatever steps you need to stop the event (i.e., calling the fire department or calling your property manager to get the right people on site to mitigate your damage.) This not only stops the event from creating further damage but also is a condition in your actual insurance policy. Should the carrier feel that the damage, or part thereof, was preventable and that your actions failed to mitigate that damage, then the carrier can deny payment for those damages that it feels could have been prevented. As such, K.I.S.S. and stop the event as soon as you can.

Now What….

     Once you’ve mitigated your damage and prevented it as best you can from getting worse, you should call the association’s lawyer and, along with your property manager, explore retaining a law firm what handles insurance claims—particularly, one that understands the complexities of claims and how they relate to associations (shameless plug alert: MLF has been recognized throughout Florida as one of the preeminent law firms handling association claims).

     Hiring a law firm—one that is not already your counsel—has its advantages.

     First, a law firm that handles this type of work can give you legal opinions about the policy and its interpretation. They can point out what should be covered, what some of the pitfalls of the purchased policy may be, and, most importantly, give advice as to how to properly present the claim to ensure that the association maximizes its recovery.      

Photo by iStockphoto.com/sefa ozel

     Second, the law firm usually has or works with a team of adjusters, consultants, engineers, and the like that can assist the law firm in assessing damage and rendering opinions that may be vital during the claims process and, if needed, through litigation. This is usually included in the fee due the law firm and, as such, makes it much more cost efficient than piecemealing the process. In other words, these firms are usually one-stop shops where everything—both pre- and post-lawsuit—can be handled.

     Third, the hiring of these law firms—again, one that is not your general counsel already—can prevent any conflicts of interest from happening. Think of it this way: if your current firm has to make sure that the insurance claim is handled correctly from A to Z and in conformity with your bylaws, how can they handle the claim itself? Doing so may put them in a position where they may have to essentially “tell” on themselves. This is all avoided by hiring another law firm to handle the process.

     Apart from the above, hiring a law firm that handles these types of claims brings inherent value in that they handle the entire claim process from A to Z and, in so doing, take a lot off of the association’s proverbial plate. They will report the loss to the insurance company, inspect the loss, hire those experts needed to assess the damage and formulate opinions, make sure that the association complies with the insurance policy at issue, fight those fights with the insurance carrier when their requests are unreasonable (which is often), push for advance payments when appropriate, hurry them when they take too long,  and, by their sheer involvement, make the carrier take an extra few looks at the claim before making a potentially wrong coverage determination.

     In short, there are a lot of advantages to hiring a law firm to handle your claim from the inception, and it should seriously be considered on every potential claim.

Photo by iStockphoto.com/gpointstudio

So, they are handling the claim, but what do we do?

     Once the association hires the right firm to handle the claim, their job does not end. The board still has to make sure that the damage is properly documented before removal of material. Moreover, they have to do the actual heavy lifting and take whatever steps are necessary to get back to normal life as soon as possible. All the while, they must ensure that the members of the association are informed of the process and its current standing.

     This is harder than one would think. You must remember that not everyone’s interests are the same. Some want their property, if damaged, fixed yesterday while others may want monetary compensation. Some may even want garbage removed, landscaping fixed, or the pool opened. Everyone will have a different request and different priorities. Juggling all of these competing interests is not easy.

     The best way to do this, however, is to K.I.S.S.

     First, set up a plan as soon as possible as to which topics will be handled and in what order. Do this in conjunction with the association’s attorney (so as) to make sure that you are complying with the association bylaws. Second, put the plan in action. Do so by dividing tasks among board members and/or committees. This will lead to efficiency and speed in getting tasks done. Third and most importantly, keep the association members informed of the plan. Use monthly newsletters and meetings to accomplish this. Keeping the membership informed will not only provide clarity as to the overall process, but it will also preemptively address questions that may exist and, in so doing, prevent possible misunderstandings and—I can’t stress this enough—show that progress is being made and is being done so transparently. This is huge given the amount of money usually involved in claims of this size.

     As you can see, employing K.I.S.S. is a great strategy when presented with a claim and can help you comply with the do’s and don’ts of your association’s rules, maximize your recovery, and keep the association’s members as cooperative and part of the process as possible. Please don’t confuse it with KISS. I’m not sure how much Gene Simmons and Paul Stanley can help. 

Luis A. Mena, Esq.

Founding Manager, Mena Law Firm

     Luis A. Mena, Esq., is the founding, Managing Member of Mena Law Firm (“MLF”), a law firm which represents condominium associations in their insurance disputes against their insurance carriers. With offices throughout Florida, MLF is committed to the client-centered and passionate advocacy of its clients and prides itself on delivering large firm style representation with the personal, one-on-one service typical of a boutique law firm. Mr. Mena has more than 20 years of experience in the insurance industry. For more information, call (833) MENA-LAW or (305) 529-1771 or visit www.menalawfirm.com.