In California, homeowner associations generally have a duty to purchase and maintain insurance policies to protect against a variety of risks. Most if not all insurance policies require their insureds to give prompt notice of a potential or actual claim. The language of the insurance policy typically places a contractual obligation on the homeowner association to “immediately” or “promptly” notify the insurance carrier. The concern is that if a potential or actual claim is not promptly tendered that the homeowner association will face a risk of loss of coverage under the insurance policy. As a general rule, it is the best practice to tender potential and actual claims as soon as possible.

However, it is also important to note that a failure to promptly notify an insurance carrier of a potential or actual claim is not necessarily fatal to obtaining coverage. Moreover, the meaning typically given to “immediate” or “prompt” notification is that notice must be given within a reasonable amount of time under the circumstances. In addition, if the insurance policy is an “occurrence” or a “claims-made” policy, then California courts have generally required the insurance carrier to demonstrate that they have suffered actual prejudice in order to avoid their contractual duties under the insurance policy.

If your homeowner association is facing a potential or actual claim triggering insurance, then we recommend consulting with the homeowner association's legal counsel and insurance broker (or agent) promptly to assist in tendering the claim.