What If A Claim Is Filed By A Condo Unit Owner Or Association ?
Protect Your Financial Health In Case A Maintenance Issue Escalates Into Damage .
CONDO CLAIMS
As a condo unit owner , a dishwasher leak in your home could have a major trickle-down effect that costs thousands . And the damage could be worse at the unit under yours . We are seeing more frequent water damage claims which drive up premiums and deductibles .
The problem might stem from a washing machine hose that dry-rots and cracks . Icemaker lines may break or detach . Aging hot water heaters can leak . HVAC condensate lines can clog and cause standing water . Many of these common problems may be prevented with routine checks , maintenance , and scheduled replacement .
WHAT IF A PROBLEM ORIGINATES IN MY UNIT ?
Let ’ s say a water incident originates in your unit on the fourth floor and causes damage to the three condos below you .
WHO IS RESPONSIBLE FOR THE DAMAGE ?
This is a question to ask before you purchase a condominium and while you are discussing coverage with your insurance advisor , because the answer can change per community or by state . Typically , the Association is charged with insuring the building , including the units . But in today ’ s environment , Associations are seeing higher deductibles on their property policies . A $ 10,000 deductible could increase to $ 25,000 or $ 50,000 after even a minor water claim .
WHO ’ S RESPONSIBLE FOR THE DEDUCTIBLE COST ?
The Association is the named insured on the policy . Ultimately , the Association is responsible for the deductible cost in a covered claim . But the Association can then decide to charge the deductible back to a unit owner . ( State statutes and governing documents should be reviewed prior to the Association billing the cost of the deductible to a unit owner .)
BY : MEGAN MULLER , CIC SENIOR CLIENT ADVISOR
WHAT IF THE ASSOCIATION CHARGES ME FOR THAT DEDUCTIBLE ?
The unit owner can secure insurance on the unit that would cover the cost of the Master Property Policy deductible when assessed . Carriers pay for this deductible in different manners — some out of the property coverage ( or coverage A ) and some out of the loss assessment coverage . Understanding if your condominium will charge you the deductible is key when purchasing the unit owner policy . And a unit owner should reach out to their agent to find out whether the deductible will be paid if assessed .
Unfortunately , many condo owners don ’ t realize that without unit owner coverage , they may be financially liable when damage originates or occurs in their unit . As an Association , you can help avoid this confusion . Communicate the Master Insurance Policy deductible responsibility that unit owners will bear if a claim is filed and their condo is where the incident originated . This way , they can speak to an insurance advisor about gaining proper coverage .
WHAT HAPPENED WITH THE DISHWASHER LEAK ?
Water damage is prevalent , so let ’ s play out the leaky dishwasher scenario . Several other units suffer damage , but the deductible from the Master Policy is passed along to the unit where the problem started . The Association files a claim , and the carrier pays out for all the damages minus the deductible . The Association then sends a bill to the unit owner of origin for the deductible amount . ( In Maryland , that bill cannot exceed $ 10,000 .) The unit owner can then decide to pay the assessment or submit a claim to their own unit owner policy .
To be prepared for the what-ifs , you need to understand the coverage an Association carries as well as the deductible expenses you might be responsible for in case of a claim . But insurance and condo laws continue to evolve . To make informed decisions and protect your peace of mind , check in with your insurance advisor regularly . +
BY : HOPE THOMAS SENIOR CLIENT ADVISOR
Ask The Questions
• As a unit owner , what are my insurance responsibilities ?
• What does the Association cover — and not cover ? You can find these answers in your Governing Documents and State Statutes .
• Does my building require any special insurance coverage ? Some condominiums require the unit owners to purchase unit owner policies . Again , check those documents .
• Will my Unit Owner Policy cover improvements and upgrades in case of damage ? If your policy includes Coverage A Property coverage , improvements and upgrades will be covered . But if you aren ’ t sure , call your agent !
• Will my Unit Owner Policy cover the master policy deductible if it ’ s charged to my unit ? This depends on the carrier , so check with your insurance agent on specifics .
• What is the Association doing to keep up with mechanicals like hot water heaters , replacements like roofing , and general maintenance to prevent damage and claims ?
Megan Muller joined Deeley in 2014 and specializes in condominiums , human services and nonprofits . She volunteers on the board of the Lower Shore Clinic in Salisbury , MD . 410.213.5578 • mmuller @ deeleyinsurance . com
Hope Thomas joined Deeley in 2016 as a Client Advisor . She has 22 years of media consulting and sales experience . She resides in West Ocean City , MD with her husband . Hope enjoys working with clients in the condominium , amusement , and hospitality industries . 410.213.5552 • hthomas @ deeleyinsurance . com
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