How to Recover from a Disaster

The Challenge

One of our buildings – a 97-unit condo in Connecticut – lost 40 apartments to a huge blaze in 2013 that was caused by arson. The condominium had insurance. But that primarily covered only the common areas and some things in the apartments, only up to builders’ grade. It was therefore very important for the unit-owners to have homeowners’ insurance. Some people didn’t have it, and they lost their personal belongings and any improvements to their units. It was a $3.5 million loss.

The Solution

We went to a local engineer to make sure the structure was good, and checked local code enforcement officials that helped us during the reconstruction phase of the building. We hired a public adjuster for the insurance claim, which, when it is based on a fire, is an action that we recommend. The rebuilding took about a year. The common charges for the unit-owners were covered by the condo’s insurance policy for up to one year, but the unit-owners had to cover their own apartment mortgages and property taxes. The board was heavily involved with approving estimates and meeting with various contractors. Common areas were renovated completely, and there were many upgrades to the plumbing and electrical systems.

The Lesson

Make sure you’re fully insured. It’s not a bad idea to sit down with your insurance broker and go over your policy at the time of renewal. If you have a building that has a certain structure, or something that needs to be additionally insured, you can hire an insurance consultant to come in, analyze your policy, give feedback, and maybe offer some additional coverage.