Introduction
Insurance disputes can be one of the most challenging aspects of managing a condominium association. The American Coastal Insurance Co. v. Hanson’s Landing (2021) case provides a clear lesson: all coverage disputes must be settled before any appraisal process begins. Understanding why is crucial for board members, property managers, and anyone involved in community association governance.
Case Background
- Incident & Delay
In 2015, a hailstorm caused significant damage to Hanson’s Landing, a condominium association. However, the Association did not notify its insurer, American Coastal Insurance, until August 2017—more than two years after the storm. - Insurer’s Response
American Coastal issued a reservation of rights (indicating possible denial of coverage) and ultimately denied the claim. The insurer cited:- Delayed notice of the damage.
- Allegations that the claim was “grossly inflated” by approximately $17 million.
- Potential fraud by the Association.
- Legal Action
Hanson’s Landing sued for breach of contract and sought a declaratory judgment to force an appraisal. The trial court granted this motion without first addressing the coverage dispute, prompting American Coastal to appeal.
The Appellate Court’s Ruling
On appeal, the court reversed the trial court’s decision, holding that:
- Coverage disputes must be resolved before an appraisal can be ordered.
- An appraisal only determines the amount of loss; it does not establish whether coverage exists.
By seeking an appraisal prematurely, Hanson’s Landing effectively tried to skip over determining whether the policy even covered the claim in the first place.
Key Takeaways for Community Associations
The lessons from this case serve as a reminder of the legal and procedural complexities of insurance claims:
- Timely Notification is Crucial
Failing to report damage promptly can jeopardize coverage. Always inform your insurer immediately after discovering any damage—even if you’re unsure of the extent of the loss. - Understand the Appraisal Process
An appraisal cannot resolve coverage questions. Its only purpose is to establish the value of a covered loss. Make sure coverage is confirmed before requesting an appraisal. - Work with Professionals
Insurance and legal professionals can help navigate coverage disputes, ensuring your association meets all policy requirements and protects its interests.
Why This Matters
Although this case may not significantly alter everyday practices for most community associations, it highlights an essential point: board members and property managers who understand these legal principles can avoid costly mistakes when managing insurance claims.
How Highlight Risk Services Can Help
At Highlight Risk Services, we specialize in guiding community associations through the complexities of insurance and risk management. Our services include:
- Evaluating policies to ensure proper coverage.
- Advising on best practices for filing timely claims.
- Providing support and resources during coverage disputes.
Have Questions?
If you need expert assistance with insurance coverage, claims, or risk management for your association, we’re here to help.
Reach out to us today or learn more about our services at Highlight Risk Services.
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