By: Harris B. Katz, Esq. Special to the Boca and Delray newspapers
Q: My friend’s condominium unit was damaged during the September 2017 hurricane. The renovations revealed a host of issues, some of which may have pre-dated the storm. The biggest problem was that the roof structure was not up to the current code, delaying repairs for months. Meanwhile, my friend is paying out of pocket for another home due to the damage to her residence. The condominium association and her own homeowner’s insurance are at odds over paying for their respective parts of the repairs. Short of hiring a lawyer, is there an arbitration process that can be used here?
K.R., Boca Raton
A: Unfortunately, after Hurricane Irma, many property owners learned that most of the time insurance companies are in the business of saving money, not in paying out claims. Generally, when an insurance company sends an adjuster out to your property, they try to resolve claims for the smallest amount possible or deny them outright based upon exclusions in the insurance policy. In order to do so, they typically try to find items that are excluded from coverage in your insurance policy. One issue that arises when a home suffers the loss of a major building component, such as a roof, is that when repairs are undertaken, the roof will need to be brought up to current building codes. One way to protect yourself from running into this issue is to make sure that you have Ordinance or Law coverage as part of your insurance coverage. Ordinance or law coverage helps you pay for the increased costs incurred to repair or replace damaged buildings in accordance with ordinances or laws that regulate construction, repair or demolition of a property. In other words, when a residence is repaired after an insurable event, current building codes may require that you bring it up to code before the building department will issue a permit. Ordinance or law coverage covers those costs associated with this type of situation. For example, a covered event, such as a hurricane may damage only a portion of your roof, but the building code may require that the entire roof be retrofitted or replaced in order to meet newer, more stringent hurricane codes compared to what was in place when your home was built. Unfortunately, these code-related upgrades, even though they are required by law, are considered to be improvements and would not be covered by your typical policy without ordinance or law coverage.
In the context of a condominium, the association would be responsible for the roof, while your friend’s homeowner’s insurance would be responsible for the interior damage to her home. The competing coverages and interests of the condominium’s insurance company versus your friend’s insurance company will often place them at odds with one another, placing the insureds squarely in the middle of the dispute. That being said, your condominium has a responsibility to protect your friend’s unit from damage to common elements of the building, including the roof. Another type of coverage that your friend should have in her policy is Additional Living Expenses (ALE) coverage which would cover the cost of maintaining a comparable standard of living following a covered loss. Your friend should read her policy to determine what is covered and what limits she has on those coverages.
In regard to the arbitration question, there are provisions in homeowner’s policies that provide for appraisal. An appraisal is similar to an arbitration in that a binding decision is made by an independent umpire. A typical situation is that when a policyholder and insurance company do not agree on the value of the loss, either can demand that the damages be determined by appraisal under the provisions of the policy. At that point, the policyholder and the insurer will each hire an independent appraiser and the two appraisers will try to work out the claim. If the appraisers can’t agree, they will submit their differences to the umpire who will make a binding decision, similar to a judge. Keep in mind that the decision is generally not appealable, so before you agree to an appraisal, you should speak to an attorney who is well-versed in first-party property law. Florida law provides that, as an insured, she may be entitled to attorney’s fees if she has to file a lawsuit against the insurance company. In addition, your friend may have claims against her condominium association for breaches of its responsibilities to your friend, as a unit owner.
Harris B. Katz, Esq.., is Partner of the Law Firm Goede, Adamczyk, DeBoest & Cross, PLLC. Visit www.gadclaw.com or to ask questions about your issues for future columns, send your inquiry to: firstname.lastname@example.org. The information provided herein is for informational purposes only and should not be construed as legal advice. The publication of this article does not create an attorney-client relationship between the reader and Goede, Adamczyk, DeBoest & Cross, PLLC. or any of our attorneys. Readers should not act or refrain from acting based upon the information contained in this article without first contacting an attorney, if you have questions about any of the issues raised herein. The hiring of an attorney is a decision that should not be based solely on advertisements or this column.