Individuals, associations and other entities carry insurance coverage to protect them from liability, loss, and other financial and legal threats—that's pretty basic. What isn't always so basic is deciding when to file a claim versus paying out of pocket for a loss or damage.
Paying—whether for property damage because of an unaddressed leak, or an injury sustained on-premises—can be very expensive, and arguably defeats the purpose of paying insurance premiums for coverage. On the other hand, a history of claims can cause a building or association to pay ever-higher premiums, or even be dropped from its insurance entirely…or so conventional wisdom tells us. Let’s investigate further.
Name That Claim
When determining whether or not to claim a loss on an insurance policy, the first criterion is what sort of claim it would be. A broken window or a leaky roof is a vastly different matter than a slip and fall. Let’s take the latter scenario first, as it is more straightforward.
“In a liability claim, I’d say, any time somebody is demanding something, you have to put the carrier on notice,” says Tammy Hynes, AAI, CPIA, a partner and client advisor with Gulfshore Insurance in Naples. Failure to do so could have devastating effects on the HOA’s pocketbook.
“If somebody fell and came to me looking for damages, I would have no choice but to put my carrier on notice,” Hynes continues. “Because if it becomes something later, and I didn’t put them on notice, I could jeopardize my coverage completely. Let’s say that Jane falls on my property and breaks her arm. She says, ‘All I really want you to do is pay my medical bills.’ And the board says okay, that’s two thousand dollars, just pay her and let her go away. She has four years from that time to come back and say, ‘You know what? I fell, I broke my arm, my arm’s never felt really good since, and I’m going to sue you because of it.’ Well, now, we didn’t put the carrier on notice of this claim. We knew it happened, but we didn’t tell them, and we can jeopardize our coverage for that reason.”