Many associations know the complexity of a large insurance claim all too well. Whether it is a fire, hurricane, earthquake, or water leak, dealing with adjusters, tenants, and other board members can be difficult and confusing at times. In most cases, best practices dictate that a single director should be appointed to “head up” the insurance claim effort. While the whole board should make decisions together, having a single individual as the contact person for the insurance company and/or its adjusters can relieve stress and avoid confusion.
Another important aspect of having a single individual as the board’s representative is that that director can better keep a comprehensive record of the events and dealings with adjusters and other insurance representatives. This can be very important with large, and often complex, community association claims where communications with the insurer are often frequent and important.
While each conversation with the insurer or its representatives should be documented and, if possible, confirmed in a letter back to the adjuster, this is vital when there is any type of agreement reached.
While many policyholders are hopeful when an insurance adjuster agrees that a loss is covered or that a certain amount will be paid, occasionally the carrier may disagree and attempt to back out on the deal. This can delay a claim even further and can cause frustration and confusion in a delicate time that should be devoted to repairing the property.
As courts have recognized, “[a]n adjuster by definition is a “representative of the insurer who seeks to determine the extent of the firm’s liability for loss when a claim is submitted.” See Bankers Sec. Ins. Co. v. Brady, 765 So. 2d 870, 872 (Fla. 5th DCA 2000). If an adjuster holds himself out as a representative of the insurer with full authority to make decisions and act on the insurer’s behalf, the insurer is bound by these agreements.
In Bankers, the issue arose when the insurance adjuster and policyholder’s retained public adjuster agreed on the amount due under the contract. Unfortunately, the insurance company dismissed its adjuster shortly thereafter and refused to honor his previous agreement.
The court denied the insurance carrier’s attempt to revoke the previous settlement agreement and found that the settlement was binding based on the oral stipulation of its adjuster. Thus, the carrier was required to pay the amounts previously agreed upon.
In large, complex, community association claims, it is important to document each conversation with the insurer. Doing so can help avoid disagreements later as to what was agreed upon by the adjuster and can prove invaluable if an agreement is later retracted.