HOA or Condo Insurance Claim - Question

Started by KapsL • 15 replies • 1655 views

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KapsL (California)
Posts: 6

Posted:

Hi Everybody -

we had a big water leak in the common area hallway, and that leak was impacting a unit underneath in terms of some drywall repair in the kitchen area.
we are fixing the common area hallway leak through HOA funds and special asssessment- but we are wondering is HOA responsible for drywall repair in the unit ?
or should we ask the resident to use condo insurance ?

the hoa is 6 unit building only so runs very small reserves and we in the board are thinking anything that impact internal to a unit should be claimed from condo insurance. the resident is saying if he uses condo insurance then it would raise their premiums. but at the same time if every unit internal fixing was put on HOA it is not sustainable too.

but again this could be argued both ways. what is the right thing to do ?

thanks

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By KapsL on 04/05/2017 6:50 AM
Hi Everybody -

we had a big water leak in the common area hallway, and that leak was impacting a unit underneath in terms of some drywall repair in the kitchen area.
we are fixing the common area hallway leak through HOA funds and special asssessment- but we are wondering is HOA responsible for drywall repair in the unit ?
or should we ask the resident to use condo insurance ?

the hoa is 6 unit building only so runs very small reserves and we in the board are thinking anything that impact internal to a unit should be claimed from condo insurance. the resident is saying if he uses condo insurance then it would raise their premiums. but at the same time if every unit internal fixing was put on HOA it is not sustainable too.

but again this could be argued both ways. what is the right thing to do ?

thanks

It appears that because the leak occurred in the common area this is a loss attributed to the HOA. What should happen is the homeowner affected should contact their insurance company who in turn will file a claim against the HOA, which would be the proper thing to do. Why would the homeowner's insurance want to pay for something that was the fault of the HOA?

DouglasM6 (Arizona)
Posts: 724

Posted:

He needs to call his insurance company. Just because the leak happened in the common area doesn't mean the HOA "caused" the leak. If the HOA was negligent in maintaining something, then there may be liability.

My .02

BobD4 (up north)
Posts: 1,002

Posted:

Repeated discussions at sites like this suggest that many owners fail to insure (or under-insure) their unit, have tenants who ignore tenant insurance, and/or may not be much less competent than condo/HOA Boards.

Totally agree that contacting one's own insurer is usually the best advice if for no other reason than the distribution of skillsets involved.

Some not-so-easy issues include :

Why should an association - but not an owner - escape liability under a first time pinhole rupture for example, but still try ( for example ) to shriek negligence when instead it happens to an owner's brand new, professionally installed dish washer ?

Also : If your policies don't contain a compulsory 'waiver of subrogation', what stops the insurers from colluding to circularly re-route a loss totally back within a complex ? ie slope-shouldering the loss back within the community instead of making victims whole out of its expensable, loss-satisfying compensation assets ?

Some Boards escalate Master Policy deductibles - some $ 50K to $ 100K around here - and try anything to slope-shoulder loss onto unit owners by voodoo theories & withholding Master claims.

No wonder lots of abuse can happen, and having one's own unit insurer may be the only defence . . .

RichardP13 (California)
Posts: 3,868

Posted:

Quote:

Posted By DouglasM6 on 04/05/2017 8:15 AM
He needs to call his insurance company. Just because the leak happened in the common area doesn't mean the HOA "caused" the leak. If the HOA was negligent in maintaining something, then there may be liability.

My .02

The party at fault would be liable for damages.

SheliaH (Indiana)
Posts: 6,964

Posted:

Our association insurance doesn't cover anything from the drywall in, regardless of what caused it, so we've educated our homeowners on getting the right condo insurance. Their agents can contact our property manager for information on the policy so they can ensure there's no over or under insurance.

When I was on the board, we wrestled with this issue and during that time, we also learned most homeowner insurance policies require a ride to cover sewer backup and water damage, so we've also told homeowners they should consider getting that coverage as well as require tenants renting their home to get renter's insurance that may also cover damages if their negligence or abuse causes damage to the common area.

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

KerryL1 (California)
Posts: 14,550

Posted:

Our CC&Rs state that the HOA does cover floor & drywall repair/replacement in our condo units, but no other "improvements," e.g., cabinets, when the leaks are due to a common area problem. It doesn't matter if "negligence" is involved, e.g., pinhole leaks in common area piping. Our HOA covers the damage to the common areas & condos, per the above.

MarkM31 (Washington)
Posts: 494

Posted:

Quote:

Posted By SheliaH on 04/05/2017 9:16 AM
Our association insurance doesn't cover anything from the drywall in, regardless of what caused it.

That doesn't absolve the HOA of liability.

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Quote:

Posted By MarkM31 on 04/05/2017 12:49 PM

Posted By SheliaH on 04/05/2017 9:16 AM
Our association insurance doesn't cover anything from the drywall in, regardless of what caused it.

That doesn't absolve the HOA of liability.

I agree.

BobD4 (up north)
Posts: 1,002

Posted:

I don't know California law, but respectfully I would be surprised if many jurisdictions allow GROSS negligence - not merely lesser negligence - to be dared lifted off the back of any civil party.

Regardless of what's in a Declaration or CCRs, it would tend to declare open season on the worst examples of sociopathic damage-causing.

That said, a legislative bar to liability claims against an association for some lesser breaches of duty or merely some non-blameworthy causality, perhaps might bar claims by a unit owner after damage that somehow merely emerged from association-governed common elements or fixtures.

Whatever, in many of these disputes, state law may have to sort it out. And having a competent insurer may be the most cost-effective defence for a unit owner suffering damage.

JeffT2 (Iowa)
Posts: 880

Posted:

This is from a California law firm:

"....Many homeowners mistakenly believe that their associations are strictly liable for any damage or loss they may suffer even if the HOA was not the cause of the loss. For example, a plumbing leak damages an owner's unit does not automatically make the association liable for the damage. The standard for HOA liability is negligence (unless the governing documents establish a different standard). Accordingly, the HOA must have had a duty to maintain the particular plumbing line, the HOA breached that duty (the board knew or should have known that the line needed repair and failed to take action to repair it), and the HOA's breach of its duty caused a loss to the owner. Under those conditions, the association may be liable to the owner for the loss he/she suffered."

http://www.davis-stirling.com/Main-Index/Negligence-Defined

Kaps, was the association somehow negligent, or did this pipe (or roof) just start to leak?

JeffT2 (Iowa)
Posts: 880

Posted:

Kaps, in some ways, this is really simple. The unit owner has to stop fooling around and put in an insurance claim. Tell the owner that the board has a fiduciary duty to not spend the association's money until it is established that the association is responsible, and you can't know that until (among other things) a claim is filed.

You can also call your insurance agent for free advice on coverage and general insurance principles. Also read the insurance section of your governing documents.

KapsL (California)
Posts: 6

Posted:

Thanks everyone.

The leak is happening in a common area hallway tile, which is just a result of building defect. HOA immidiately called quotes to repair the common area tile leak fix but the damage to the unit is also being asked for HOA to pay for. and thats the part the unit owner is saying will file a lawsuit if hoa doesnt pay for it.

root cause is building defect in the form of common area floor tile leak

KerryL1 (California)
Posts: 14,550

Posted:

How old is your HOA? Is your HOA in litigation for a Construction defect?? I mean with an attorney, etc?

Again, ready your documents, especially your CC&Rs. WHAT do they say the HOA is responsible for??????

JohnC46 (South Carolina)
Posts: 14,265

Posted:

Kaps

It is a normal reaction for a unit owner to blame the association for the damage and want them to pay to repair versus file a claim with their insurance company and possibly incur a rate increase. After all, the unit owner is right. But..but...there is a procedure to follow to do things properly/legally and that is for the unit owner to get the ball rolling by filing a claim with their insurance company and let the insurance companies duke it out. It is call subrogation.

Gently/kindly inform the unit owner of proper procedure.

BobD4 (up north)
Posts: 1,002

Posted:

KapsL : Take a look also at the Water & Gutter damage discussion recently here, which briefly touched on building deficiency aspects :

http://www.hoatalk.com/Forum/tabid/55/forumid/1/postid/225531/view/topic/Default.aspx

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