Misrepresentations to Insurance Carrier Cost Association Over $700,000.00

United States Court of Appeals decision (February 7, 2020).

The case involved a dispute between a condominium owners association (“Association”) and its property insurance carrier (“Carrier”) over coverage for property damage resulting from a hailstorm.

In 2013, Association purchased an insurance policy from Carrier that covered the term from November 12, 2013 through November 12, 2014. Prior to issuing the policy, Carrier inspected the Association Property to determine its condition and verify that it was appropriate to insure.

On September 29, 2014, a severe wind and hailstorm damaged portions of Association’s common area roofs, gutters, screens and garages. Association’s property manager was not aware of the storm and was not initially contacted by anyone from Association regarding the issue of property damage from the hailstorm.

In April 2015, the property manager hired a roofing contractor to provide a proposal for repairs to a roof on one of the condominium structures. The contractor who inspected the property observed what he believed to be hail damage on the roof and mentioned that in his written proposal, stating “There is evidence of hail impacts on both the flat and steep roofs and it is recommended that your insurance company be contacted immediately. You may have a claim.” The manager forwarded copies of the contractor’s proposal to Association’s board members, who approved the proposal.

In September 2015, the property manager observed damage to some downspouts and window trims while inspecting the property. She thereafter reported the damage to an adjuster and requested that the property be inspected to determine the extent and cause of the damage she observed. The property was inspected the following month and the inspector concluded that there was significant hail damage that needed to be repaired. The manager then met with Association’s board to advise them of the findings by the adjuster. The board then authorized the retention of the adjuster and the submittal of a claim for the hail damage to Carrier. The property manager then retained the original roofing contractor who had initially advised of the hail damage to assist the adjuster in establishing the scope of the damage and the amount of the claim to be submitted to Carrier. The adjuster and the roofing contractor then provided an estimate of approximately $1.8 million dollars for the cost of repairing the hail damage. The claim was then submitted to Association’s insurance agent in December 2015.

After learning of the claim, Carrier: