When it comes to insurance claims, it is not always the case that the insurance agent or the insurance company knows best. Condominium corporations should always be on guard to protect their interests, and that means it would be prudent to question any decision, whether made by the insurance agent or the insurance company, that results in insurance coverage being denied or limited.
The following two situations illustrate the importance of obtaining second opinions from qualified professionals with respect to insurance matters.
Recently, a condominium corporation was faced with a claim by a unit owner for compensation for damage suffered to his car as a result of a leak from a common element pipe. The corporation contacted its insurance agent who advised that the claim was not covered because there was no damage to the common elements. However, the claim related to an alleged breach by the corporation of its duty as occupier of the common elements and, as required under the Condominium Act, 1998, the corporation's insurance policy had coverage with respect to such claims (subject, of course, to the deductible clause that limited the amount payable by the insurer). However, the corporation's board did not question the agent's position and did not seek an opinion from the corporation's lawyer as to the corporation's insurance coverage. As a result, the corporation settled the matter directly with the unit owner and ended up paying significantly more than the amount of the deductible, had the claim been covered by the insurance company.
A few years ago, a condominium corporation experienced flooding in its basement floor from a burst municipal sewer pipe. The sewer water caused the vinyl tile flooring in the basement hallway to buckle and lift. The insurance company hired a contractor to repair the damage. The vinyl flooring was replaced, but within a month the tiles began to buckle and lift. The insurance company hired an engineering firm to look into the problem and the conclusion was that the bucking and lifting of the tiles was caused by the deterioration of the concrete floor slab, which was the original builder’s fault, and not caused by the flooding. Accordingly, the insurance company refused to pay to repair the buckling and lifting vinyl tiles. In this case however, the condominium corporation hired its own engineers for a second opinion. The engineers' report concluded that the insurance company's engineers confused (maybe purposely?) the leveling material that had been laid by the builder on top of the concrete slab with the concrete slab itself. The report stated that the insurance company’s contractor was deficient because the contractor should have removed the unsanitary water soaked leveling material and laid new leveling material before putting down the new tiles. Based on the report, the corporation satisfactorily settled the matter with the insurance company.
In conclusion, it pays to obtain a second opinion whenever the corporation's insurance coverage is denied or limited by the insurance agent or the insurance company.