Insurance is a very strange product.  Everyone is scared to death to be without it, but when it’s time to put in a claim, everyone is scared to death to use it.

Delay in reporting a claim to your insurance company can be a costly mistake.  Every policy contains provisions that require the insured to report claims timely so that evidence is preserved, witnesses can be spoken to and the insurance company has the opportunity to reduce its potential exposure.  In condos and HOAs there are so many times of claims that need to be timely reported and if not do so, can result in a complete and total defense to the insurance company providing any defense or insurance coverage.

Let me give you an example of how an HOA can untimely report a potential claim to their carrier.  Suppose the HOA does not get served with a lawsuit, but instead gets served with a demand for pre-suit mediation?  I have seen some associations fail to tell their liability or D&O Carrier about the mediation demand and instead allow their HOA attorney to deal with it.  If the case fails to settle at mediation and the association gets sued, the association then decides to notify their carrier.   Too late.  The carrier was required to know about the demand for pre-suit mediation.  The carrier will now take the position that they are no longer under any obligation to defend the association or pay the claimant any damages because they were prejudiced by not being told about the mediation.  They will claim that they could have potentially settled the case at mediation for a fraction of what it will now cost to try in court or settle.

Here’s the bottom line…..if the board or management company receives  a letter or e-mail from someone who claims they were injured on the condominium property or that their unit, car or property was damaged at the condominium, or threatens a lawsuit, arbitration or mediation — NOTIFY YOUR INSURANCE AGENT OR CARRIER IMMEDIATELY.  Worse comes to worse, the carrier may say the claim is premature because you have not actually been sued.  That’s a lot better than being told by the carrier that you blew the deadline to notify them of the claim, and now there is no coverage.

            You’re paying for the coverage.  Don’t be afraid to use it.