Standard Insurance Policies Almost Always Deny Coverage for the Following Claims
Subrogation Actions
Subrogation is a commonly used tool by insurance companies to seek compensation from community associations and other property owners. For example, after a unit resident’s insurance policy pays a claim, the carrier will seek reimbursement for any damage caused by the associations negligence. When the association forwards the claim to the general liability (GL) or directors and officers (DL) carrier, they may discover the policy does not include coverage.
Mold Actions
As we all know, living in Florida with the frequent rainfall, high humidity and heat, mold is quite common. Mold can also be caused by leaks from roofs, pipes, walls and windows, condensation, lack of air conditioning, clogged gutters and poor drainage. Even certain building materials that absorb moisture can cause mold. Mold can cause various health issues such as allergic reactions, sinus infections, serious lung infections, respiratory issues, neurological issues, and other chronic conditions. Property damage that needs to be renovated, loss of property that has been contaminated and bad health conditions that need to be treated are all claims that are usually excluded by your primary insurance.
Water Damage
Water damage from mishaps such as roof leaks, blocked gutters, foundation cracks, improper sealing, etc., can damage the property in other ways than mold. Common examples are stained walls and ceilings, warped floors, peeling paint or wallpaper, damaged insulation, structural damage (water exposure can weaken structural elements, such as beams and joints, leading to potential safety hazards), musty odors, foundation issues and more.
Other Environmental Hazards
Asbestos, radon, lead paint, sinkholes, pest infestations, chemicals, pollutants, etc. are often limited or excluded in standard policies as well.
Breach of Contract
A breach of contract occurs when one party fails to fulfill their obligations as outlined in a legally binding agreement. For example, a contractor is hired to do work on your property and his work is incomplete, done inadequately, or not finished on time or at all. Even though you may be justified in holding back payment, the contractor may file a lawsuit against you seeking full payment. Standard insurance policies most often do not cover these actions, and you will need to hire an attorney to defend you in court.
Personal Injury
There are numerous instances where insurances companies deny coverage for personal injury cases that occur on community or commercial properties. The following are just a few examples:
- Intentional Acts – Any injury or damage resulting from intentional acts, such as fights or vandalism, is typically not covered by insurance. Additionally, any intentional act or misconduct by any association member or business owner that causes injury or damage is generally excluded as well.
- Prohibited Activities – If any injury occurred during a prohibited activity or event, as in an unauthorized gathering, the primary policy most likely will not cover it.
- Non-Compliance with Regulations – If the association or business failed to comply with local regulations or building codes, a denial of coverage is highly probable.
- Liquor Liability – If the association or business serves alcohol at an event, there may be exclusions for any liabilities arising from alcohol-related incidents without a specific liquor liability policy.
- Sexual or Physical Abuse – Policies often exclude coverage for claims related to sexual or physical abuse.
- Inadequate Emergency Response – If a person suffers an injury during a crisis (ex. fire) and the property is found to have inadequate emergency plans or responses, coverage can be denied for “Failure to Prepare Adequately”.
- Negligent Hiring Practice – If an employee causes injury or harm to another person through inappropriate behavior, the association or business owner must prove they conducted proper background checks, maintained proper documentation of the hiring process and implemented regular training sessions. If they fail to do so, coverage will most likely be denied based on “Negligent Hiring Practices”.
- Exclusions in the Policy – Examples of exclusions in standard policies are claims resulting from criminal activities or actions of third parties, accidents during recreational activities such as swimming pool accidents, skateboarding incidents, playground mishaps, fishing or boating accidents, tennis or pickleball injuries, basketball, injuries during an organized event or game, and injuries occurring on hiking/walking trails managed by the property.
Floods
Flooding, which can cause extensive property damage and sometimes injuries, is either extremely limited or even excluded in standard insurance policies. The cost of flood insurance can be very costly due to the high expectations of tropical storms, hurricanes, storm surges, heavy rainfall, high tides, and the quickly rising sea level. When the floods come, so will the lawsuits against the boards and property owners. Traditional liability policies do not defend these suits.
These are just a few reasons to add the BOLD Supplemental Legal Defense Insurance Policy to your portfolio. BOLD will ensure you are fully protected and comprehensively covered. BOLD will step up when your primary insurance company steps out.