As an HOA board member, you have likely faced the challenge of managing insurance claims after a fire affects common areas or water infiltration damages multiple units. These situations quickly become complex, especially when the insurance company’s settlement offer falls significantly short of what contractors estimate for proper repairs. This gap threatens your reserves and could force special assessments on homeowners. Without the appraisal process to resolve this dispute, your board faces limited, often costly options.
Understanding the appraisal clause
Most HOA insurance policies include an appraisal provision for resolving disputes over damage amounts. Each party selects an appraiser, and those appraisers choose an umpire. Together, they determine the actual repair costs, which typically results in fairer outcomes.
Common insurer tactics to recognize
Insurers use several strategies to avoid appraisal, and knowing them often leads to higher payouts. Here are some of their common tactics:
- Reframing valuation as coverage issues: Insurers might claim that disagreements are about coverage (excluded from appraisal) rather than valuation. They often classify storm damage as excluded perils to avoid the appraisal process entirely.
- Claiming waiver through delay: Insurers could argue that HOAs waited too long to request an appraisal, pressuring boards to accept inadequate settlements rather than assert their rights.
- Challenging appraiser independence: Insurers frequently contest an HOA’s appraiser selection as biased. These tactics force associations to choose less qualified appraisers or face prolonged delays.
- Creating procedural obstacles: Carriers demand excessive documentation, additional inspections or formal examinations before proceeding. This creates administrative burdens designed to exhaust volunteer boards.
Recognizing these tactics is the first step to protecting your community’s finances.
Protecting your association’s rights
HOA boards facing these tactics should:
- Document all communication with insurers
- Invoke appraisal promptly after reaching an impasse
- Select appraisers with both technical expertise and process experience
- Understand recent Texas court decisions that have strengthened policyholder rights
When insurance companies resist valid appraisal requests, they are often protecting their financial interests at your community’s expense. If you have encountered resistance, reaching out to an insurance lawyer familiar with HOA insurance matters might be your best course of action.