Two Simple Questions About Condo Insurance

[Peter Cini]

General Statement:

Unit X extensively damaged by water from another homeowner, Unit Y. For the sake of argument, the homeowner who caused the flooding is negligent, not on here for a long drawn out discussion on that matter.

1. Moving and storage costs of the owner of Unit X, these are covered under "Loss of Use Coverage", not "Dwelling" correct? Note: Moving and storage required as it was a total demo.
2. If for any reason a limit is hit under Unit X's policy, that homeowner is then to seek recourse under the insurance of Unit Y.

Thanks.

 

[fed up]

You have some of it backwards. If Unit Y, which caused the flooding, is solely responsible for the damage, the initial claim should go to Unit Y for negligence. Most Condo policies cover damage caused by certain perils, so Unit X would have to look at own policy language to see if there was coverage outside of theft, lightning, etc. As to 'Loss of Use', again initial claim should go to Unit Y.
Hopefully this would not fall under Master Policy of condo building because then it gets real messy

 

[Virginia650]

With all due respect that is not how it works.

Subrogation is a term describing a right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

 

[fed up]

With all due respect that is not how it works.

Subrogation is a term describing a right held by most insurance carriers to legally pursue a third party that caused an insurance loss to the insured. This is done in order to recover the amount of the claim paid by the insurance carrier to the insured for the loss.

You should always start with the responsible party, NEVER go to your own carrier first. Get the name of the carrier for the unit which caused the damage and file a claim. IF there is pushback, AND ONLY IF there is pushback should you involve your carrier for the claim or subrogation

 

[Virginia650]

Waivers on subrogation get very complicated, state laws, HOA policies, insurance agreements, etc. Not going to your insurance company immediately can also cause problems. Not a lawyer. I think this is getting off track from the initial questions.

 

[adjusterjack]

I'm a retired property claims adjuster. I've handled many condo water damage claims. Let's start with some basics.

The Condominium Unit Owners Policy HO-6 is the industry standard for condos. The HO-6 always covers

"Sudden and accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system, or from within a household appliance."

I suppose somebody could buy a monoline fire policy that doesn't include that but such a policy would be few and far between.

As for "moving and storage" here's what the policy says:

"Additional Living Expense. When a Loss Insured causes the residence premises to become uninhabitable, we will cover the necessary increase in cost you incur to maintain your standard of living for up to 24 months. Our payment is limited to incurred costs for the shortest of: (a) the time required to repair or replace the premises; (b) the time required for your household to settle elsewhere; or (c) 24 months."

Temporary storage of personal property is not covered by Additional Living Expense, it's covered by Coverage C - Personal Property.

As for going after the responsible party first and not your own insurance company, I disagree. Your own insurance company has a contractual obligation to handle your claim right now. The upstairs neighbor's insurance company has no such obligation and it could take weeks, or months, to get any kind of decision out of the upstairs neighbor's insurance company. There will almost always be pushback. There will almost always be in investigation into the liability of the upstairs neighbor and that isn't going to happen overnight.

The chances of the upstairs neighbor's insurance company making an immediate commitment to the claim are slim but, obviously, if that does happen on the first phone call, sure, go for it.

Your own insurance company is in a position to make an immediate commitment to dry-out and remediation expense if there isn't an immediate response from the upstairs neighbor's insurance company.

Where an immediate response to a serious water damage claim is critical your own insurance company is the place to go. After your claim is taken care of your insurance company will subrogate and attempt to get reimbursement from the responsible party or his insurance company. When subrogation is successful you get your deductible back.

"Fed Up" mentions complications caused by the HOA master policy. Those complications almost always arise with serious water damage claims. For water from the upstairs unit to damage the downstairs unit, the water often travels through structural elements that are not defined by the CC&Rs as "unit" and, therefore, have to be covered by the HOA master policy. Co-ordinating the two does get messy.

 

[Allen Trent]

I'm a retired property claims adjuster. I've handled many condo water damage claims. Let's start with some basics.

The Condominium Unit Owners Policy HO-6 is the industry standard for condos. The HO-6 always covers

"Sudden and accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protective sprinkler system, or from within a household appliance."

I suppose somebody could buy a monoline fire policy that doesn't include that but such a policy would be few and far between.

As for "moving and storage" here's what the policy says:

"Additional Living Expense. When a Loss Insured causes the residence premises to become uninhabitable, we will cover the necessary increase in cost you incur to maintain your standard of living for up to 24 months. Our payment is limited to incurred costs for the shortest of: (a) the time required to repair or replace the premises; (b) the time required for your household to settle elsewhere; or (c) 24 months."

Temporary storage of personal property is not covered by Additional Living Expense, it's covered by Coverage C - Personal Property.

As for going after the responsible party first and not your own insurance company, I disagree. Your own insurance company has a contractual obligation to handle your claim right now. The upstairs neighbor's insurance company has no such obligation and it could take weeks, or months, to get any kind of decision out of the upstairs neighbor's insurance company. There will almost always be pushback. There will almost always be in investigation into the liability of the upstairs neighbor and that isn't going to happen overnight.

The chances of the upstairs neighbor's insurance company making an immediate commitment to the claim are slim but, obviously, if that does happen on the first phone call, sure, go for it.

Your own insurance company is in a position to make an immediate commitment to dry-out and remediation expense if there isn't an immediate response from the upstairs neighbor's insurance company.

Where an immediate response to a serious water damage claim is critical your own insurance company is the place to go. After your claim is taken care of your insurance company will subrogate and attempt to get reimbursement from the responsible party or his insurance company. When subrogation is successful you get your deductible back.

"Fed Up" mentions complications caused by the HOA master policy. Those complications almost always arise with serious water damage claims. For water from the upstairs unit to damage the downstairs unit, the water often travels through structural elements that are not defined by the CC&Rs as "unit" and, therefore, have to be covered by the HOA master policy. Co-ordinating the two does get messy.

Also, wouldnt the other unit-owner's property damage coverage only provide ACV coverage if they indeed did provide coverage for causing the loss?

 

[adjusterjack]

Also, wouldnt the other unit-owner's property damage coverage only provide ACV coverage if they indeed did provide coverage for causing the loss?

Yes, that's exactly right.

And a much better reason to look to your own policy instead of the neighbor's.

An HO-6 is a Replacement Cost policy for building and personal property.

 

[Allen Trent]

Yes, that's exactly right.

And a much better reason to look to your own policy instead of the neighbor's.

An HO-6 is a Replacement Cost policy for building and personal property.

I thought I remembered it correctly. Waiting for the other carrier, then getting ACV & then having to go back to your own carrier will delay it even more.

Been a long time, but I recall a claim in MI where a car hit a condo. took months for car insurance to pay their partial share of what a kitchen cupboard door depreciated value was even though cabinets no longer made. Then came the master policy to pay their parts of the claim for what was part of the master policy, then finally came the unit owners to pick up all the pieces. By the end of the months & months of chaos, insureds were irritated & the various contractors were even more upset

 

[Virginia650]

As for "moving and storage" here's what the policy says:

1. Temporary storage of personal property is not covered by Additional Living Expense, it's covered by Coverage C - Personal Property.

2. Your own insurance company is in a position to make an immediate commitment to dry-out and remediation expense if there isn't an immediate response from the upstairs neighbor's insurance company.

3. Where an immediate response to a serious water damage claim is critical your own insurance company is the place to go.

Your post was helpful and provided with good intentions so please don't take this as a criticism, rather some observations.

1. I contacted four insurance companies (Nationwide is one) they all cover storage and moving under "Loss of Use". Notice in my original post I didn't say "ALE", ALE is a component of Loss of Use. Google searches on legal sites and elsewhere confirmed the above, if I'm wrong happy to be corrected.
2. In Condo developments it is usually the HOA insurance that does the dry-out and remediation. In my case where several units were damaged, the HOA is doing the dry-out, remediation, demolition and restoration to initial spec.
3. Sadly not in my case, an entire week of unanswered messages and emails. Impossible to get through. Unit was unliveable (95-105 degrees), imagine doing a self packout of over 120 boxes in those conditions, protecting furniture/equipment for moving and arranging your own living accomodations, storage and so on. Nightmare. Every hour you wait more stuff gets damaged, so it's breakneck pace with zero help.

How do you reach your agent? Call? "Due to heavy call volume, blah blah." Leave message, no response. Start calling main line, get passed around then dropped. Took me eight non-stop hours to get through (this when I had a free day to do so), finally got a cell number and repeat dialed until someone picked up. The customer service since then has barely improved, what they tell you on the phone means nothing so beware of incurring costs with their "approval", they can snatch that back at any time. Get it in writing? Sorry, we can't do that.

I went to great lengths to keep costs at a bare minimum and not to charge for stuff most people routinely do. My take on it? Don't bother trying to save insurance companies money, they don't care. Even with restoration, offer to paint at 1/10 the cost of what the insurance company is paying, not interested. Exaggerating? A paint job classified as a betterment, took me about 7 hours and $110.00 in material costs. Insurance company contractors said they could do it. Charge? $1,880.00.

The only helpful entity in this mess has been the homeowner's insurance company that caused all this. Responds within 30 minutes, is very well informed and extremely helpful. They provided far more information than my company did.