HRS 514B-143 Insurance Advice

Emergency Planning For Water Damage/How To File Hawaii Insurance Claims

Are You Ready For Catastrophic Water Damage In Your Building?

by Mano Nguyen, CMCA®, April 25, 2015
Scenario: It’s 3:00am in Honolulu and a water pipe just busted on the 5th floor of your building causing damage to every unit below it.  Your building does not have a resident or a site manager.  The building is losing value by the minute and owners are soaking wet and upset.  What do you do first?  Who do you contact?  What facts do you need to gather?  Whose fault is it?  Who’s your insurance agent?  What’s your deductible?  What steps do you take next?  

Smaller walk up buildings in Honolulu with around 20 - 80 units often times do not have a resident or site manager. Catastrophic failures in water pipes or a fire in the building result in massive amounts of insurance payouts. If insurance claims are not handled properly, the affected owners have to wait from months to years to have their insurance claims paid back to them.

Understanding the roles and responsibilities of your managing agent (Property Manager) is very important.  The property manager ultimately oversees, manages, and directs the Site Managers and Resident Managers. But the associations who are without a manager or “manager-less” should always designate 1-2 board members to respond to on site emergencies.

The board member needs to know which licensed plumber to contact for emergencies at any time of the day.  Once the licensed plumber is on site, they need to identify the source of the leak and secure it immediately to minimize loss.  If the leak is in a unit in which the owner/tenant is not home, to minimize loss, the board member should contact the locksmith to break the lock, enter the unit, and have the licensed plumber secure and repair the leaking pipe. The locksmith and the plumber’s bill would then be charged to the responsible party.  The board member then needs to contact the property manager, the association’s insurance agent, and a water mitigation company to extract water damage in the building.  Activating a water extraction team within the first 24 hours greatly reduces the accumulation of mold growth. The insurance agent will send out an adjuster who will assess the damages of the property and will inspect all units for the as built water damage.  The insurance deductible can be handled a few different ways according to Hawaii Revised Statutes 514B-143, which states in part:

"(d) The board, in the case of a claim for damage to a unit or the common elements, may: 
(1) Pay the deductible amount as a common expense; 
(2) After notice and an opportunity for a hearing, assess the deductible amount against the owners who caused the damage or from whose units the damage or cause of loss originated; or
(3) Require the unit owners of the units affected to pay the deductible amount."

Be proactive and have an Emergency Plan for your building.  Post a notice in the common areas with the contact information of the following people:

1.      Property Manager
2.      Site/Resident Manager
3.      Insurance Agent
4.      Licensed Plumber
5.      Locksmith
6.      Water Extraction Company

This practice will prevent hours upon hours of headaches, hardships, time, and money for your association, owners, and managers. Please spread the knowledge.  Questions about Site Management, contact Mano Nguyen at 808.888.2773. Other questions about your association's insurance, contact your agent.

Mano Nguyen, CMCA® 
Owner/Managing Partner
NK Management, LLC