Understanding Liability Insurance Notices, Claims, and Their Impact on Associations
Michael Berg, CMCA, CIRMS, LaBarre Oksnee Insurance
Insurance is one of the most valuable tools available to an association. Liability claims can mean significant costs, not only because of judgements and settlements, but also because of defense costs. The interaction of the community with the insurance carrier, via the claims process, can affect premiums, policy conditions, and coverage or carrier availability. A board’s understanding of the difference between filing a claim and putting a carrier on notice is important in making informed decisions for the community.
There was a time when an insured could ask their insurance professional to let a carrier know that there might be a claim. The carrier would make a policy note, and if something developed later, the carrier would look back to that date of “notice” of the possible claim and address the claim from there. But simply putting a carrier on notice is not something carriers allow today. Errors occur on both the broker and the carrier side, and those errors can threaten coverage.
Today, putting a carrier on notice involves formal reporting (called a tender) to the carrier. The carrier will open a claim, assign a claim number and date of loss, and await future development. If nothing transpires, the carrier might close
30 May | June 2026
the claim without payment. The incident will show on the loss history, and the claim can be reopened if need be. It is better for the carrier to make the decision to close the file, rather than the insured assuming that nothing will come of the incident and not notify the carrier. Carrier’s may opt to leave a claim open and monitor it for a period, or even keep it open until a firm resolution is reached. It comes down to the carrier’s practice and the specifics of the claim. For example, a carrier might monitor a claim opened due to a unit owner’s threat of a lawsuit. After a period of inactivity (typically two years from the date of loss) the carrier will close the claim. The same carrier, however, may be more conservative with a claim presented by a unit owner’s attorney. The carrier might keep the claim open until it is clear that the matter will or will not progress.
A carrier should be notified of a potential claim if there is clear expectation of legal action (e.g., written or verbal threat of a lawsuit, significant bodily injury in the common area) or based on the advice of the association’s legal or insurance professional.
The immediate tender of a claim is required when a lawsuit is filed. As soon as it is certain that the carrier will need to be
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