Esoteric and infrequently-encountered coverage issues can arise when a CAT loss strikes a condominium project, especially if it is a high rise. This presentation will address some of those issues, such as the potential for conflict when one carrier represents the Homeowners’ Association and several different carriers represent the individual owners. What if the Homeowners’ Association’s carrier is slow to respond to the repair of the insured common elements, for example? That can negatively impact renovations to the individual units, and, if some of those units are rental units, it may trigger loss of income claims as well. In addition, carriers for the individual unit owners may be faced with “matching” issues because of paint discoloration, out-of-date siding, and loss of “pairs.” Delays can also give rise to claims of stigma damages to both the condominium project and to the individual units. While stigma claims have been fairly rare under these circumstances in the past, insurers have recently seen an increasing number of them and need to be prepared to respond.
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