BrianF3 (Massachusetts)
Posts: 2
Posts: 2
Posted:
I'm on the board of a condo association in MA. We are trying to figure out how to handle a repair cliam for unit damage due to leakage/condensation of a dryer vent pipe. While this is a small claim, we want to ensure we set the right precedent for future claims and boards. Any insight you have would be appreciated...
Background:
These are townhome-style units where all pipes traverse within the unit owners airspace and serve only that unit. Our by-laws state that unit owners are responsible for maintenance of all pipes that serve that unit and any damage that results from failure to satisfy these maintenance, repair, and replacement obligations.
The by-laws also state that we carry a master insurance policy which covers not only common property (roof, exterior siding, roads, etc...) but also the unit itself in the state it was sold to the first owner (unimproved state). I'm told by our master insurance policy there reasons why the master policy covers the unit itself -- the obvious one is to repair damage caused by a common area issue (i.e. roof leak) and I'm told there are others (eases ability to get mortages, FNMA requirements, and to give the association ability to resolve issues and maintain condo value if the homeowners did not carry insurance in the case of catastrophic damage such as a fire).
What Happened:
A unit owners dryer vent pipe clogged with lint. The vent pipe traverses through the unheated attic. Moisture built up and froze which either caused the pipe to burst (and leak) or to condense (and leak) which caused damage to the ceiling and walls below. The vent pipe and the damage is solely within the unit owner boundary as defined by the master deed. Normally, the board views pipe leaks as a unit owner responsiblity because they are within the unit boundary and the owner is responsible for maintenance.
The unit owner then proceeded to file a claim directly with the condo master insurance policy (and their own homeowner policy) prior to notifying the board or the management company. The master policy insurance company looked at the "insurance" section of the bylaws and determined it is a covered incident (because our master policy covers the unit). The board was notified after the unit owner was told this was a covered incident. The insurance company is now asking the board if we want to "approve" the payout. The damage is $1700 and the deductable is $1000 so the payout is $700. It is my understanding that the unit owner can than collect additional funds from their personal insurance policy (subject to that deductable) which is considered secondary to the primary master policy.
What do we do?
The board would like to avoid making any changes to the condo trust (by-laws). The board is concerned that if we authorize payout of the insurance claim, we will set a precedent for future claims due to pipe leaks and other damages or even spur on a set of retroactive cliams. We are also concerned that if we authorize the claim we may be claiming condo association responsibility for the damage and thus we may be obligated to pay the $1000 deductable (or whatever is not paid by their personal insurance) from the common funds. I'm told by the master policy insurance company that this single small claim is unlikely to raise our insurance rates since we have a good insurance record but we are concerned that it could be an issue in the future if we have a lot of these smallish claims. We are considering raising our deductable to $5000 to eliminate the smaller claims.
Should we authorize the master policy payment? If so, is the condo association taking responsibility for the damage and obligated to pay the deductable?
Any input based on similiar experience would be greatly appreciated.
Thanks,
Brian
Background:
These are townhome-style units where all pipes traverse within the unit owners airspace and serve only that unit. Our by-laws state that unit owners are responsible for maintenance of all pipes that serve that unit and any damage that results from failure to satisfy these maintenance, repair, and replacement obligations.
The by-laws also state that we carry a master insurance policy which covers not only common property (roof, exterior siding, roads, etc...) but also the unit itself in the state it was sold to the first owner (unimproved state). I'm told by our master insurance policy there reasons why the master policy covers the unit itself -- the obvious one is to repair damage caused by a common area issue (i.e. roof leak) and I'm told there are others (eases ability to get mortages, FNMA requirements, and to give the association ability to resolve issues and maintain condo value if the homeowners did not carry insurance in the case of catastrophic damage such as a fire).
What Happened:
A unit owners dryer vent pipe clogged with lint. The vent pipe traverses through the unheated attic. Moisture built up and froze which either caused the pipe to burst (and leak) or to condense (and leak) which caused damage to the ceiling and walls below. The vent pipe and the damage is solely within the unit owner boundary as defined by the master deed. Normally, the board views pipe leaks as a unit owner responsiblity because they are within the unit boundary and the owner is responsible for maintenance.
The unit owner then proceeded to file a claim directly with the condo master insurance policy (and their own homeowner policy) prior to notifying the board or the management company. The master policy insurance company looked at the "insurance" section of the bylaws and determined it is a covered incident (because our master policy covers the unit). The board was notified after the unit owner was told this was a covered incident. The insurance company is now asking the board if we want to "approve" the payout. The damage is $1700 and the deductable is $1000 so the payout is $700. It is my understanding that the unit owner can than collect additional funds from their personal insurance policy (subject to that deductable) which is considered secondary to the primary master policy.
What do we do?
The board would like to avoid making any changes to the condo trust (by-laws). The board is concerned that if we authorize payout of the insurance claim, we will set a precedent for future claims due to pipe leaks and other damages or even spur on a set of retroactive cliams. We are also concerned that if we authorize the claim we may be claiming condo association responsibility for the damage and thus we may be obligated to pay the $1000 deductable (or whatever is not paid by their personal insurance) from the common funds. I'm told by the master policy insurance company that this single small claim is unlikely to raise our insurance rates since we have a good insurance record but we are concerned that it could be an issue in the future if we have a lot of these smallish claims. We are considering raising our deductable to $5000 to eliminate the smaller claims.
Should we authorize the master policy payment? If so, is the condo association taking responsibility for the damage and obligated to pay the deductable?
Any input based on similiar experience would be greatly appreciated.
Thanks,
Brian