Homeowners Insurance Won’t Cover Damage to Downstairs Condo

K.D. from New Haven County writes:

Dear Mister Condo,

A second floor unit owner had a toilet overflow. This created extensive ceiling damage to the unit directly below. The upstairs unit’s personal insurance said they will not pay for the downstairs damage and that her Condo Association is responsible. We have no issue with her filing a claim with our Condo Insurance, but we have a $2,500 deductible. My understanding was that the person filing the claim is responsible for that deductible, and the insurance would pay for anything above that. However, this owner is saying that the damage was not created by her and that the Association is responsible from the 1st dollar, therefore the Association is responsible for the deductible.

Is it true that we are responsible for the deductible? If so, where do I find this in writing? (I cannot get a straight answer from our Insurance Company because the damages do not exceed the deductible, so there is no claim being processed by them) I find it difficult to swallow that we would have no protection from negligence of owners that create damages to other’s property.

Mister Condo replies:

K.D., you raise several interesting liability and insurance questions with this example. My gut instinct is to suggest that you speak with your association attorney before you obligate the association to pay even one penny for this owner-caused damage. Just because the unit owner’s insurance doesn’t cover the damage outside of the unit owner’s unit, the unit owner is not necessarily relieved from the resulting damage to neighboring units.

One of the clauses in the latest iteration of the Common Interest Ownership Act (also known as CIOA) includes protection for associations that adopt maintenance standards on items that are likely to fail over time. When it comes to water damage, there are many culprits. Water heaters, water supply lines to washing machines and toilets, pipes that can freeze and burst; all of these should be addressed in your list of maintenance standards and shared with your unit owners who are obligated to follow the maintenance of these items OR be held responsible if and when they fail. Now if your association took no previous action in developing and publishing maintenance standards this may be a lesson in why you need to do so before anything like this happens again. Your insurance professional should be able to help you with this so be sure to ask for a straight answer and settle for nothing less.

Once you speak with your association’s attorney you will get a better answer as to what is and isn’t the association’s responsibility in this matter. The attorney may advise you that the downstairs unit owner will need to bring suit against the upstairs unit owner that caused the damage, regardless of what that unit owner’s insurance company is willing to claim. Or, the attorney may advise you that the responsibility is, in fact, the association’s at which point the fact that it didn’t meet your deductible requirement is moot. All the best!