How to Divide Insurance Money to Owners

We had a sump pump back flow that damaged 3 units in the each onwers basement
Some units had fully finished basements , some had partial finished basements
The maters policy paid the max amount of $25K payable to the Asso.
Should this money be divided equally between the 3 owners or per the insurance settlement report that provided breaks down amounts per unit based on the FINISH square footage

The owners cannot agree on how to distribute the funds

One owner wants to divide equally , another wants to use the settle document amounts from the insurance co.

Of course some units where allocated more money per the ins report ....

Help

The damage was in the inside of the units , not common area . The master policy has a clause that it will pay a max of $25K per occurrence per a sump pump overflow . This amount was received payable to the association and to be allocated to the owners who have water damage

The HOA will not share the expenses to rebuild finished basements of 3 units as not common area and personal ins should kick in if they have it

IN regard to the check and allocation . The ins company's settlement documents broke down the payment for each unit , some get more than others based on the FINISHED square footage , some get less because they did not have as much FINISHED square footage

One owner wants to divide the $25K equally , another wants to go by the report and documents from the ins company . Each owner was allocated a different amount by the ins co

Should I divide equally or go by the insurance payout documents ?

As a unit owner, I pay an assessment for the proper maintenance of the building and for sufficient insurance. . That includes proper maintenance of the sump pumps and drains. My position would be the HOA’s sump waste entered my unit and the HOA needs to 100% fund the damage to the interior of my unit. The amount of the insurance may not sufficient to cover all 3 units, but that’s not my problem. The board approved the insurance and accepted the risk of insufficient coverage for the HOA.

The HOA’s offer to pay part of the damage may constitute an admission the HOA is responsible for the damage. However you decide the funds, you need the owners to sign off they have accepted money as full payment of their damages from the HOA.

In attached homes, it's not unusual for insurance payouts to restore the unit to the included features prior to any upgrades. For example, a kitchen's granite countertops were damaged - if laminate countertops were the included feature and the owner paid extra for an upgrade, then the insurance will cover up to the value of laminate countertops. In this case, if unfinished basements were the included feature, then the finished basement would be the owner's responsibility.

But the master policy should spell this out, and that's what the board has to abide by. If the association was not paying to insure upgrades, then why should anyone expect to cover them?

Given how touchy insurers are these days and how willing they are to jack up premiums or dump insured clients altogether, I would not recommend playing fast and loose with this. At most I'd suggest letting the HOA's insurer fight it out with the unit owners' insurers. When homeowners buy policies, their agents ask to see copies of the governing documents to make sure there are no gaps in coverage. So the insurers ought to be able to reach an agreement, which will be the proper course of action.

Our master insurance policy doesn't cover any damage to the interior (I live in a townhouse community). From the drywall in, is the homeowner's responsibility, regardless of what caused the damage, and that includes utility lines. This is one reason why we published an article in the newsletter a few years ago suggesting that homeowners talk to their insurance companies about getting sewer/water damage coverage, which usually isn't part of a standard homeowner's insurance policy.

As for this, I'd divide it according to the insurance documents - if the homeowners want to protest, they can do that on their own. You could always include the photos and the report taken by the adjuster and give that to everyone if they're still wondering why they should get more.

Emphasis on "MIGHT". We have all included insurance, but it does not cover upgrades.

Agree with Cathy. Ins. MIGHT cover replacing the carpeting. but since it was not an original "Improvement," it depends on what th CC&Rs, and therefore, what the policy says.

"Improvement" might be defined in your CC&Rs. Perhaps under a definition called Unit.