More than two years after a fire ravaged an Austin, TX condominium community, 40 owners are still unable to return to their homes. The Dry Creek West’s three-alarm fire broke out in October 2015, and has devastated dozens of lives ever since. While residents were fortunate enough to be safely evacuated, three firefighters were injured after the second floor of the building collapsed. Luckily, the community’s HOA insurance has alleviated some of the financial burden of rebuilding.
At the time of the fire, experts estimated the cost for the HOA to restore the 16 affected condominiums to be $2 million. After a months-long fire investigation, which stalled the process of reconstruction, it was determined that the fire was likely an accident stemming from an electrical power transformer. A year into the recovery process, officials decided the entire building, consisting of 20 units, needed to be demolished and completely rebuilt. The fire, smoke, and water damage had rendered the building structurally unsound.
Unfortunately, this story has still not ended. The condo owners were first led to believe they’d be able to move back in October 2016, but that date came and went without enough progress. The same missed deadline happened in December and then yet again March 2017. As of today, residents are still displaced, and the initial $2 million estimate has likely grown as the length and scope of the rebuild continues to expand.
The Dry Creek West HOA was lucky in one sense—by law, the displaced condo owners must still pay their HOA dues and mortgages. This helped the HOA to not immediately fall into financial ruin. Some owners, however, have likely defaulted as they struggle to pay for a temporary residence that seems less and less “temporary.”
Having the right insurance in place can save HOAs like Dry Creek West, but only if the policy offers the correct amount of coverage. A lack of liquid funds combined with inadequate insurance can contribute to this kind of lengthy delay in residents returning home. Nobody expects a disaster like this to go on for over two years, but the costs can continue to add up. To help speed things along, some HOA insurance policies cover a professional disaster manager. This person is able to coordinate and negotiate with multiple contractors to ensure everything is being done on time, on budget, and within local laws and regulations. It is worthwhile for HOAs to review what their policies cover and what disaster plans they have in place in the event of a devastating fire like Dry Creek West’s.
About Scott Litman Insurance Agency
At Scott Litman Insurance Agency, we are dedicated to protecting HOAs like yours. We have a unique understanding of the industry and the common risk exposures that you face in your daily operations. In fact, we find that 90% of the policies we review are missing coverages that violate the Covenants, Conditions, and Restrictions (CC&R), exposing the board, HOA and management to lawsuits – which is why our comprehensive policies are tailored to meet your specific needs at competitive prices. For more information about our products, contact our experts today at (818) 879-5980 ext. 201, or fill out our online form.