DEAR BENNY: Can you tell me what steps a board of directors/management company should take in the event a water-damage claim against the master policy is made by a condo owner? Should the board/management company investigate, take pictures of the damage, and stay actively involved throughout the claims process or merely turn the whole matter over to the insurance company and, in the event of litigation, its attorney? –Paul

DEAR PAUL: That’s a very good question. On the one hand, the board — which has a fiduciary duty to the owners — must make sure that the claim is being processed correctly and honestly. On the other hand, boards of directors are volunteers, and must be able to rely on the professionals who are paid to assist, including management.

I think the answer lies somewhere in between doing nothing and being too proactive. Management should monitor the progress of the claim and make sure that the insurance carrier has taken pictures of the water damage. Management should also confirm with outside consultants that the amount of money the carrier is prepared to pay is sufficient to make the repairs. And since insurance companies usually have their own contractors to do the repair work, management should also periodically monitor the work to determine whether it is being done correctly.

And management should submit a status report to the board on a monthly basis.

Benny L. Kass is a practicing attorney in Washington, D.C., and Maryland. No legal relationship is created by this column.

Filed under: Commentary, Legal Advice in Common Scenarios, VRN