Insurance liability is a very important issue for a condo or HOA association or a condo board. Most have built up a good relationship with their insurance agents or brokers, and many are content to leave the details to the pros.
However, the world of insurance liability isn’t static—new laws are proposed and enacted, and court decisions can have a huge impact on what will happen in any given lawsuit or insurance claim. That’s why it’s important to know the basics of what’s new on the insurance-related legislative and legal scene, and how these laws and decisions will affect their exposure to risk and loss.
In the Statehouses
Just a casual look at the bills being covered in statehouses across the country show quite a number that pop up when you search for both “condominium” and “insurance,” or “cooperative” and “insurance.” Some are overall condo and co-op-related bills that casually mention insurance in addition to other aspects of board and association governance; others are about insurance per se. Many deal solely with specific communities, or with matters such as reverse mortgages for seniors. As with most bills, the majority never reach the floor.
An example of a condo insurance-related bill before the New Jersey State Assembly is A1599, sponsored by Assembly members Scott Rumana and Kevin Rooney, which would “require condominium and homeowners’ associations to provide information to federal home loan insurance providers at no cost to potential buyers.” The bill was introduced last year and was referred to the Assembly Housing and Community Development Committee. A summary states that the bill, which would update current law, “would require condominium associations and homeowners’ associations to cooperate to the fullest possible extent with federal home loan insurance providers, by responding fully and expediently to any questionnaires or other requests for information requires by the providers before insuring a loan.”
Turning to bills that have actually been passed into law, attorney Eric Goidel, a senior partner with Borah, Goldstein, Altschuler, Nahins & Goidel in New York City, says that in January 2009, New York enacted significant amendments to Section 3420 (a) of the Insurance Law “which overturned the longstanding common law rule that allowed insurers to deny coverage of a claim based solely upon an insurer’s late notice, and regardless of whether the untimely notice prejudices the insurer in any manner.”