Published in Multi-Housing News –
Ball Janik LLP Partner Kelly M. Corcoran and attorney Kyle S. Bugden discuss how owners and managers of multi-family housing communities must understand their insurance policy protections ahead of the 2025 hurricane season. Every property insurance policy comes with post-loss obligations the insured must meet, but failing to meet those obligations can jeopardize reimbursement. As soon as a storm results in loss, Corcoran and Bugden recommend immediately notifying your carrier of the loss and ensure that no further damage occurs—which is known as mitigation.
“Mitigation presents unique challenges in a post-storm environment,” they write. “Qualified contractors are quickly overwhelmed, and pricing for services like roof tarping and water extraction can skyrocket. If you take steps to mitigate, notify your insurance company of what work is being done and when.”
Additionally, the attorneys recommend fully cooperating with any investigations undertaken by the insurer, including procuring any and all requested documentation related to earlier inspections and maintenance. It is also crucial to document all repairs to head off potential carrier defenses including “failure to mitigate” and “lack of maintenance.” And while the policy may insure the property on a replacement cost basis, in general insurers pay out the Actual Cash Value (ACV) up front, while the remaining amount, the depreciation, is only recoverable after certain conditions have been met, up to and including starting repairs.
“Taken together, the [Replacement Cost Value] requirement and the deductible amount make clear that out-of-pocket costs are unavoidable in most significant storm losses,” write Bugden and Corcoran. “Communities that delay repairs or lack financial readiness risk leaving substantial insurance benefits on the table—and may jeopardize the long-term recovery of the property.”
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