An HOA may face questions from its insurer after filing a property damage claim. A dispute over the value of the damage does not by itself mean anyone committed insurance fraud. The risk can increase if an insurer claims that a board member, officer or other representative knowingly gave false or misleading information. The person must have intent to defraud or deceive the insurer.
When can an insurance dispute become fraud?
Texas Penal Code § 35.02 makes certain insurance fraud a crime. The law applies when a person has the required intent and knowingly prepares or presents false or misleading information to an insurer.
For an HOA, the claim details matter. A contractor’s estimate that later proves wrong, a dispute over repair costs or an honest mistake does not by itself prove criminal intent. The analysis may depend on what the person knew when the information was submitted. It may also depend on whether the information was false or misleading and whether the person had the required intent.
What evidence could affect the HOA’s defense?
An insurer may review records about the reported damage. The HOA should preserve records showing how the claim was prepared and what information the board relied on, including:
- Photos and videos of the damage
- Contractor estimates and repair proposals
- Inspection reports and invoices
- Board communications and meeting records
- Communications with the insurer or adjuster
These records can document the claim’s basis and show what information the HOA relied on when it filed the claim.
What should an HOA do when fraud is alleged?
An insurance fraud allegation can take a dispute beyond the claim amount. The HOA should preserve relevant records and avoid guessing about disputed facts or making unsupported statements about the damage or claim.
When an insurer alleges intentional misconduct, early legal review can help identify the issue. The dispute may involve coverage, damage value, civil liability or possible criminal charges. Counsel can advise the association on preserving evidence, responding to the insurer and handling legal proceedings.