My last post talked about new developments that may have a significant impact on the way property insurance is issued in Florida and what role property managers may play in the future. As I stated in that post, property managers often play an important role in the insurance process. Nothing is more evident than the manager’s involvement in the claims process. While it is important for managers to be involved in the claims process, they should understand the effect their actions can have.
Recently, Crystal Colony Condominium Association brought a lawsuit against their insurer, Aspen Specialty, in an attempt to get additional insurance proceeds the association believed were owed from a previous claim. The facts of the claim are not out of the ordinary, especially in South Florida. Shortly after Hurricane Wilma, Crystal Colony made a claim to Aspen for damages it believed were incurred. Aspen paid just over $1 million for the claim, however, as time went on the association came to believe that additional money was owed. After unsuccessfully attempting to invoke the appraisal process, the association filed suit.
What makes this claim different than most others is the fact that Aspen’s payment came with conditions. Specifically, Aspen would only tender the initial amounts if the association signed a “Policyholder’s Release” releasing and discharging Aspen from any and all actions, causes of action, claims, and demands whatsoever, resulting from Hurricane Wilma.
While the reason for requiring the release is not clear, the release was apparently signed by the association’s property manager because, even though he did not believe the amounts were adequate, he believed doing so would speed up the damage repair process.
In reviewing the release, the court granted Aspen’s summary judgment and dismissed the association’s lawsuit to recover additional funds. In doing so, the court found that the release unequivocally barred any further recovery.
While the circumstances surrounding the signing of the release are vague, this should serve as a lesson to property managers and associations alike. Things are hectic after a large loss and there is undoubtedly a strong desire to get the repairs done as quickly as possible. That being said, however, make sure you read everything before signing and ensure that you understand the long term consequences of any agreement you enter into. Failing to do so could diminish your ability to recover and could lead to personal liability.
