Connectiucut Condo Insurance Law

Started by DonaldN • 13 replies • 1553 views

💬 Join us to post & get advice from 50,000 HOA & Condo leaders.

⚡ Takes 30 seconds

Already a member? Log in

DonaldN (Connecticut)
Posts: 183

Posted:

Our Master policy has a $5000 deductible ; our Board asserts that State law/regulation/statute allows the Association to amend our declaration to provide that each unit owner's HO policy will be required to cover the first $5000 instead of the Association's master policy .

Does anyone know, possibly Bruce , if the Connecticut condo statute permits this ?

SheliaH (Indiana)
Posts: 6,964

Posted:

If you have legal questions, you really need to consult an attorney. Also check your documents - usually amendments to the bylaws, CCRs and declaration require homeowner approval, so your documents should state how that is to be done and what the approval percentage is. What did the board say when you asked this question and why they want to establish such a policy?

Our association's master insurance has a $5000 deductible and our policy has always been if damages to the unit resulted from homeowner negligence or abuse (or that of their tenants, the homeowner has to pay the deductible (I'm in a townhouse community). That may be what your board is trying to do, but depending on how your documents are written, you may not need to change them to establish such a policy.

Remember, the more claims, the more likely premiums will skyrocket or the association will lose its coverage altogether and it's very difficult to find such insurance these days. Shortly before I brought my unit, the association was dropped because of its claims history and it managed to find insurance in the nick of time, but the premiums were (and still are) very expensive. That's another reason homeowners were told they'd be on the hook for the deductible for damages due to neglect or abuse.

As a practical matter, your board may want to strongly encourage homeowners to check their policies to ensure their liability insurance would be able to cover things like the deductible. Better yet, your insurance agent may want to check the association's master policy against your homeowner's insurance to ensure you aren't over or under-insured.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

EllieD (Vermont)
Posts: 446

Posted:

I believe that this is a very specific Connecticut Insurance question re Condominiums. At one time the latest Vermont and Connecticut State, Acts, Statutes, were very similar, as they were both based on the UCIOA.

But during the last few years or so, changes were made to the Connecticut Statue re the various required Insurance Coverages specifically for Condominiums. I am sorry I do not have the time to research, but hopefully someone else can.

JamesG (Connecticut)
Posts: 83

Posted:

From the Ct. CIOA: See item (e) for your answer.

Sec. 47-257. Assessments for common expenses. Assessments due to willful misconduct, failure to comply with standards or gross negligence. (a) Until the association makes a common expense assessment, the declarant shall pay all common expenses. After an assessment has been made by the association, assessments shall be made at least annually, based on a budget adopted at least annually by the association.

(b) Except for assessments under subsections (c), (d) and (e) of this section, or as otherwise provided in this chapter, all common expenses shall be assessed against all the units in accordance with the allocations set forth in the declaration pursuant to subsections (a) and (b) of section 47-226. The association may charge interest on any past due assessment or portion thereof at the rate established by the association, not exceeding eighteen per cent per year.

(c) To the extent required by the declaration: (1) Any common expense associated with the maintenance, repair or replacement of a limited common element shall be assessed against the units to which that limited common element is assigned, equally, or in any other proportion the declaration provides; (2) any common expense or portion thereof benefiting fewer than all of the units or their owners may be assessed exclusively against the units benefited; and (3) the costs of insurance shall be assessed in proportion to risk and the costs of utilities shall be assessed in proportion to usage.

(d) Assessments to pay a judgment against the association may be made only against the units in the common interest community at the time the judgment was rendered, in proportion to their common expense liabilities.

(e) If any common expense is caused by the willful misconduct, failure to comply with a written maintenance standard promulgated by the association or gross negligence of any unit owner or tenant or a guest or invitee of a unit owner or tenant, the association may, after notice and hearing, assess the portion of that common expense in excess of any insurance proceeds received by the association under its insurance policy, whether that portion results from the application of a deductible or otherwise, exclusively against that owner's unit.

(f) If common expense liabilities are reallocated, common expense assessments and any installment thereof not yet due shall be recalculated in accordance with the reallocated common expense liabilities.

(g) No unit owner may exempt himself from liability for payment of the common expenses by waiver of the use or enjoyment of any of the common elements or by abandonment of the unit against which the assessments are made.

DonaldN (Connecticut)
Posts: 183

Posted:

Thanks everyone for the thoughtful responses ; over the last few years our reserves have been depleted due to many small expense claims related to Winter weather , e.g. internal unit damage due to ice dams .

The Board here is adverse to :

(a) broad assessments to all units
(b) bank loans
(c) raising monthly common charges
(d) changing the master policy deductible to 0 from $5,000 because of the impact on premium .

JamesG , Section 47-257(e) addresses misconduct and talks about Common expense - our Board wants to apply that wording to any property damage under $5,000 to an individual Unit - I don't see where the Connecticut statute permits this .

Specifically our Board wants each Unit owner to pay the first $5,000 under their individual HO policy .

The following is a portion of the wording under Section 47-257(e):

"assess the portion of that common expense in excess of any insurance proceeds received by the association under its insurance policy, whether that portion results from the application of a deductible or otherwise, exclusively against that owner's unit"

They are all English words but I don't really know what it's saying ?? to me it's obviously a case of a lawyer taking a technical issue and attempting to put it into words .

JamesG (Connecticut)
Posts: 83

Posted:

(e) If any common expense is caused by the willful misconduct, failure to comply with a written maintenance standard promulgated by the association or gross negligence of any unit owner or tenant or a guest or invitee of a unit owner or tenant, the association may, after notice and hearing, assess the portion of that common expense in excess of any insurance proceeds received by the association under its insurance policy, whether that portion results from the application of a deductible or otherwise, exclusively against that owner's unit.

Yes, you are correct that this clause does not, in general, allow for assignment of the deductible to an individual unit or units that suffered an insured loss.

However, if the association properly adopted a set of unit owner maintenance standards and a loss was due to non-compliance with those standards, then the deductible can be assessed against that unit. For example, if the standard states that the water must be turned off when going away for a period, and they did not and a leak occurred with water running for days before discovery - this this owner should pay the entire deductible.

The issue of willful misconduct or negligence is much more difficult to prove.

I have attached our owner maintenance standards. Hope that this helps clarify.

📎 Attachments (1):

⏸ Downloads temporarily unavailable

📄1415183159271.pdf(23 KB)

JohnC46 (South Carolina)
Posts: 14,265

Posted:

However, if the association properly adopted a set of unit owner maintenance standards and a loss was due to non-compliance with those standards, then the deductible can be assessed against that unit. For example, if the standard states that the water must be turned off when going away for a period, and they did not and a leak occurred with water running for days before discovery - this this owner should pay the entire deductible.

Great suggestion/idea from James.

SheliaH (Indiana)
Posts: 6,964

Posted:

Posted By DonaldN on 04/15/2016 1:19 PM
Thanks everyone for the thoughtful responses ; over the last few years our reserves have been depleted due to many small expense claims related to Winter weather , e.g. internal unit damage due to ice dams .

The Board here is adverse to :

(a) broad assessments to all units
(b) bank loans
(c) raising monthly common charges
(d) changing the master policy deductible to 0 from $5,000 because of the impact on premium .

It's one thing to charge owners the deductible when their abuse/neglect caused the damage, but this is beginning to sound like your board wants to stick the first $5000 worth of damage on ANYTHING to the homeowners. I think that's inappropriate if that damage was done to the common area the Association is responsible for maintaining AND there's no indication the homeowner was responsible.

Next, it looks like preventative maintenance isn't your community's strong suit (maybe because people want to keep assessments low?) For example, you said some claims were for interior unit damage due to ice dams. Maybe your community need to budget for periodic inspections during winter after a heavy snowfall and have the ice dams removed to prevent roof damage and the interior damage that could come with it. Even then, my community's policy states homeowners are responsible for repairs to the interior regardless of the cause - if your association wants everything covered, homeowners need to be willing to pay for the cost that goes along with that. Otherwise, that's why one gets homeowner insurance, thus settling the $5K question.

All of this means your board has bigger problems, starting with allowing the reserves to become depleted for small expense claims. Reserves are supposed to pay for major repairs/replacement of common area components (e.g. roof replacement). This stinks of (1) your assessments are simply too small cover regular expenses or preventative maintenance and (2) no reserve planning at all, which would include getting a reserve study. Do you even have one? If so, when was the last time anyone looked at it like they should have to help with annual budget planning?

I suggest your board have a serious sit-down with your insurance carrier and take a long hard look at the policy and claims history, along with the documents to see where money can be saved. Maybe what you really need is some sort of risk management plan - what areas tend to be the most vulnerable to claims and what can be done to replace the risk. If you don't have a reserve study, get one - you'll probably find you need lots of money in it and you're way behind, which means the board will have no choice but to rethink its position of not raising assessments. No one likes fee increases, but would you prefer special assessments of several thousand dollars a pop? Or loans that will jack up assessments anyway because you have to pay routine expenses, fund reserves AND repay the loan and the interest that goes along with that? Simply pinning the first $5K of damage on the homeowner is a symptom of more mess to come if someone doesn't face reality and start dealing with it.

If it is not right do not do it; if it is not true do not say it. Marcus Aurelius

DonaldN (Connecticut)
Posts: 183

Posted:

Thanks again Sheila , unfortunately our community is guilty of everything in you recent post ; I have sent an email to a local attorney, who specializes in condo law, requesting an opinion as to whether our declaration can be amended as recommended by the Board to require unit owners to pick up that first $5,000 .

the following link and article is a good example of our situation :

http://www.ctcondonews.com/2015/09/15/ask-atty-pat-how-to-get-the-association-to-pay-and-repair-ice-damming/

JamesG (Connecticut)
Posts: 83

Posted:

See two attachments on how two CT condo attorneys have different opinions on the assignment of the insurance deductible to only the units sustaining the damage.

📎 Attachments (2):

⏸ Downloads temporarily unavailable

📄1417185744671.pdf(55 KB)

📄1417185955554.pdf(131 KB)

DonaldN (Connecticut)
Posts: 183

Posted:

thanks JamesG , to me it's now becoming a question of whether the CT statute is either ambiguous or subject to interpretation or maybe both .

If the statute is clear and unambiguous , then our declaration would have to be aligned with it .

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By DonaldN on 04/14/2016 1:56 PM
Our Master policy has a $5000 deductible ; our Board asserts that State law/regulation/statute allows the Association to amend our declaration to provide that each unit owner's HO policy will be required to cover the first $5000 instead of the Association's master policy. Does anyone know, possibly Bruce , if the Connecticut CONDO statute permits this ?

DonaldN Conn In addition to your lawyer's comments, respectfully it would be worth your while to determine the following or ask that lawyer :

1- You asked about "condo law", but Connecticut separates statutory condos ( particularly created after 1984) from common interest communities of which the above citations seem all derived. Those 2 are

ch 828 Connecticut Ch 828 Common Interest Ownership Act https://www.cga.ct.gov/current/pub/chap_828.htm

Connecticut Ch 825 “Condominium Act of 1976” https://www.cga.ct.gov/current/pub/chap_825.htm
with a condo-specific Sec. 47-83. Insurance.

2- The question respectfully seems to include whether the state law empowers whatever site- specific governance body (under whichever of the 2 separate laws above) to extend the circumstances under which NON-BLAMEWORTHY insurable losses can be slope-shouldered onto a particular unit owner. Otherwise master deductibles are a common expense to be funded in the Declaration formula for all common expense items unless such as the condo chapters provision allowing risk-specific special assessments.

It is not a blameworthy loss generally if an otherwise recent, professionally installed, good quality water heater for example or metallic braided washer hoses, merely fail unforseeably. First time unforseeable losses - not violating some governance document - are tough to view as blameworthy.

3- ( The "circumstances extending" debate in my own jurisdiction has moved to specifically legislate that condo corporations can potentially lay blameless damage deductibles onto unit owners if the insurable loss is within the master policy. After 15 years when this was possible by 50% + one vote by-law, the legislature will now require a full Declaration amendment.
That ain't your case but it illustrates that a major issue is whether whatever type of governance you have, actually has authority or scope to shift the master policy deductibles and how far ? Can they shift blameless loss deductible them onto a specific blameless owner ? Master policy deductibles here are reported hitting $20K to even $ 100 K, and there is belief that secondary unit owner insurance is allegedly cheaper globally . . .)

Your lawyer's advice should determine.

DonaldN (Connecticut)
Posts: 183

Posted:

thanks Bob , I don't see anything in the CT statute currently that shifts the deductible from the master policy to the individual owner's policy via an amendment to the Declaration ; a lawyer for our association drafted an amendment but (1) the statute is silent on permitting it and (2) the wording doesn't seem to accomplish the shift .

BobD4 (up north)
Posts: 1,002

Posted:

Quote:

Posted By DonaldN Our Master policy has a $5000 deductible ; our Board asserts that State law/regulation/statute allows the Association to amend our declaration to provide that each unit owner's HO policy will be required to cover the first $5000 instead of the Association's master policy. Does anyone know, possibly Bruce , if the Connecticut condo statute permits this ?

. . . I don't see anything in the CT statute currently that shifts the deductible from the master policy to the individual owner's policy via an amendment to the Declaration ; a lawyer for our association drafted an amendment but (1) the statute is silent on permitting it and (2) the wording doesn't seem to accomplish the shift.

Donald N Conn :
Respectfully, it may be that your lawyer conversely will be able instead to point to provisions within either ch 828 or 825 - whichever applies to you - that empower or positively detail what is the scope for inclusion in a Declaration including by amendment. Not just changes which your Board claims owners can make.

Some jurisdictions list scopes or fields of power for association governance bodies, outside which they have zero 'vires' or potential jurisdiction.

State laws for example may also specifically void claimed powers to the contrary of what is in the state law, or may subject at least the by-laws to a "reasonableness" standard, whatever.

That lawyer may be able to tell you the statutory provisions and how far Connecticut courts have allowed amendments to go. Looking at ch 825 and 828, some may see few limits on what Connecticut owners can enact into their Declarations, maybe a troubling scenario. . . .

🎯 You've read this entire discussion

Join the conversation with 50,000 HOA & Condo Leaders:

✓ Ask follow-up questions
✓ Share your experience
✓ Get expert advice
✓ Access 350,000 discussions

Create Free Account →

⚡ Takes 30 seconds

Already a member? Log in here