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If a Neighbor Damages Your Condo, Who Makes the Insurance Claim?

Written by Ilyce Glink on April 22, 2013 in Insurance  |   20 comments

You open the door to your condominium after a long day of work, but before you settle in for the night, you notice water dripping from the ceiling and a large discolored spot on your living room carpet. It appears as if a toilet or…

insurance claim insurance policyYou open the door to your condominium after a long day of work, but before you settle in for the night, you notice water dripping from the ceiling and a large discolored spot on your living room carpet. It appears as if a toilet or bathtub belonging to your upstairs neighbor has overflowed, causing damage to your own unit.

Who is at fault in this sticky situation, and how is your unit covered?

“The worst thing is for folks to do nothing on the assumption that someone else’s insurance will cover the damage,” said Rich Rykens, a claims team manager from State Farm.

This could turn into a complex situation because multiple parties are involved, including the other condo owner and possibly the condo association. In addition, your condo association’s bylaws—and even state laws—may affect who ultimately foots the bill.

Although it’s difficult to look at this scenario and immediately determine who is responsible for the damage in your condo, there is a protocol that you can follow to get the mess cleaned up.

Be proactive. Immediately file a claim with your own insurance company, which may cover the damage according to the limits of your condo owner’s policy.

Unlike homeowners insurance, there is no standard insurance policy for condo owners. The type of insurance policy you have as a condo owner is dependent on the master policy held by the condo association. You probably contribute to this on a monthly basis through assessments. Although it differs from building to building, the condo association master policy usually covers the building’s structure, exterior parts, and shared spaces.

Once you file a claim with your own insurance company, it will investigate whether or not a third party—like the upstairs neighbor, the condo association, or a plumber—was responsible, said Justin Herndon, a member of the Allstate National Media Team.

If a third party is at fault for the damage in your unit, your insurance company will then subrogate the claim with that party, which means it will try to recoup what it paid out in the claim. If your insurance company is able to recover any of the costs, it may refund you for repairs paid for out of pocket, according to Rykens.

This procedure should apply to submitting insurance claims for other types of damage in your condo. Shared living spaces can be difficult at times, but as a condo owner, it’s important to read both your master and individual policies so you understand how you are covered before coming home to another accident.

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and Buy, Close, Move In!. She blogs about money and real estate at ThinkGlink.com and at the Home Equity blog for CBS MoneyWatch.

20 comments

  1. John says:

    Interesting article. I’ve never owned a condo but my friend has been through a lot of issues with his association and insurance company because structural issues. Definitely read through your condo insurance policy or you could be on the hook for issues.

    • EFX Moderator, EM says:

      John, You’re right. You should review your own condo policy as well as the association’s policy to see all that’s covered and who’s responsible for what. You want to make sure you’re covered. Thanks for sharing your thoughts.

  2. Tammy says:

    What happens when the condo owner on the bottom has no homeowners insurance?

    • EFX Moderator, EM says:

      Tammy, it’s hard to say without knowing the policy of the condo association, but each condo owner should have their own condo insurance policy. Any damage created by another unit might be covered by the master policy or it might not, it’s hard to say. You should review the master policy held by the condo association to be sure. If you have questions, the insurance agent should be able to help you out. I hope that helps.

  3. W Somers says:

    Very good article. As a retired General Adjuster, I might add that some condo associations and/or management companies will resist claims against the master policy even though the master policy clearly covers the loss. As the article suggests, make sure you or your representative understand the condo by-laws, master policy and state statutes before accepting a denial of coverage.

  4. Richard in St. Louis says:

    In our condo, the bylaws waive our rights to subrogation, so is strictly on our own policies. We had situation where damage done from broken water pipe where thousands of $ damage done, and us and our insurance had to foot the bill. If your neighbor is uncooperative as our neighbor was it becomes a sticky situation. Makes for poor neighbor relations. Recommend from our experience if you see in covenants waiver of subrogation, do not buy there.

    • EFX Moderator, EM says:

      Richard, thank you so much for sharing your experience. We really appreciate the information. Thanks.

  5. John D says:

    I’ve had this problem where water leakage came dripping from the upper floor bathroom and caused damage to my lighting fixtures and ceilings. The condo HOA insurance did take care of the damages. Not sure if they went after the homeowners above but we were covered.

  6. MaryAnne Holub says:

    Doesn’t the homeowner specifically have to carry flood insurance to not be denied coverage for an incident like this?

  7. Alexis L says:

    If I contact my insurance company because of damage to my unit not caused by me, will that impact my insurance rates and will I still have to pay my deductible?

    • EFX Moderator, KB says:

      Alexis L, good question. Do you know who caused the damage? If it was your neighbor, for example, and they have the proper insurance, this situation should be easier to manage.

      But if whoever damaged your property and has no insurance, the quickest way to get your property repaired may be to call your insurance agent in order to make a claim on your own insurance policy—provided that you have proper coverage and the damage is over your deductible.

      Here is a link with more information: http://blog.equifax.com/insurance/tips-for-handling-claims-when-your-neighbor-has-no-insurance/

  8. Eve says:

    I own a condo. I have a water leak from amy water heater. I filed a claim from my own insurance triple a, they sent their contract to work in my unit. And few days later they told me I have to file a claim in my home owners asso. Insurance bec. They are primary ,Which I did and they declined it. Now I’m frustrated bec. Both insurance juggled me. Both insurance decline my claims. Is there anybody who could help me with my problem. Thank you for your time

  9. Elaine says:

    We have a condo in Texas, the third floor condo owner had a major leak which has effected the second and bottom floors (our is bottom). We did not have insurance and have had the unit up for sale and periodically rented. The water damage occurred Thanksgiving 2013, and we are still not being paid what we had to spend to repair. Consequently we had renters that were suppose to move in December 1, 2013 and had to decline the contract. So in lieu of repairs and lost revenue of $12,600.00 the insurance wants to pay us $8,500.00 for total loss. Meaning we are out $4,100.00, stating that they pay for depreciated values only.. How can they say that? Our condo was in fine shape, we had it totally repainted 3 yrs ago and hung new wallpaper in kitchen and bathroom at the same time. Now they want to depreciate everything and pay as little as possible. They had Servpro Cleaning come out and they made more of a mess than good, but they will pay them $2,800.00 for their service and my contractor charged me $4,880.00 to tear out and replace sheet-rock, texture, paint, replace insulation and tear out wet carpet and pad. Contractor also moved furniture for carpet company to install new carpet and they allowed $2,200.00 for his repairs. Something just seems a bit off here if you ask me. New carpet cost $2,286.00 and then we had contract for rental which we had to cancel so we lost revenue of $2,600. there. Our total damage repairs are $12,566 and they want to pay $8,500.00 leaving us holding the bag $4,066.00. What do we do now????

  10. Jen says:

    Our neighbor started a grease fire around thanksgiving 2013. By word of mouth we understand that this was a renter without renter insurance. The grease fire set off the sprinkler system through out the entire building. Our unit had damage to the hardwood floors. The Condominium contracted an independent company to repair the damages and insurance adjustor to assess the work. Our work was completed and then we were given a bill and deadline to pay within few weeks! We footed the bill. The total was less than our insurance deductible. I would like to file a suborgation but the condominium management, mainly the GM, informed me they’re not able to provide me information about the insurance provider of the unit or the unit owner or renter. They will not provide any information. Our insurance agent would like name of the unit owner and insurance company before being able to pursue. What are our rights? How do we get this information?

    • EFX Moderator, KB says:

      Jen, sorry to hear about your situation. You may want to consult with a lawyer who can better answer your questions.

      Best of luck.

  11. Greg says:

    the condo unit upstairs from my garage leaked causing damage to my garage ceiling drywall. His insurance company called touting the “not negligent” claim that the wouldn’t repair my ceiling. However now, they want access to my garage to open up my ceiling more to fix his drain. I have clause in CC&Rs stating I need provide him easement for repairs, but is he liable to repair my drywall that he has to rip open to fix his drain? There is nothing explicitly stated about this in CC&Rs

  12. Holly says:

    I’m a little confused. This article states: “’The worst thing is for folks to do nothing on the assumption that someone else’s insurance will cover the damage,’ said Rich Rykens, a claims team manager from State Farm.”

    My mother’s unit flooded because of a corroded pipe from the upstair’s unit that was in the common area. Because neither the association nor the upstairs owner wanted to take responsibility, my mother had to get in a plumber and get it fixed. Between her deductible and plumber’s bills, she paid approximately $1,600 out of pocket. Her insurance company said they could not recoup any money from the upstair’s unit because she was not negligent. ? Apparently she has to be told there is a problem with her pipe and do nothing about it to be considered negligent. What I’ve learned from all this is the opposite of what this person said, tell the upstairs owner and association there is a major problem with the pipe (that isn’t yours) and wait it out.

  13. Sherry says:

    I live in a Townhome, these are individual homes that you buy. My neighbor has flooded my home 5 times from washing machine to toilets running over. We do have a home owner association and it the bylaws states clearly that it pays for exterior damages,not interior and each homeowner should buy their own personal policy to cover the interior of our homes and liabilities of damages done to others. This owner is a Realtor and uses this unit as rental property and should know these things and we have talked to her about her responsibilities several times. She has a copy of the bylaws of the property and knows that she is responsible for these damages. Each time she avoids our phone calls and sends the plumber to our home. The plumbing is in her wall not ours and he comes to me to let him in her unit that is now empty and having repairs done to it to be leased out again. She will get the plumber to fix that one problem, but never finds the solution that is causing the continuous flooding to our unit. We were just flooded again yesterday. Our wall is wet again and baseboards are coming apart. All my furniture has been wet several times and the bottom of each piece is coming apart including all my wool rugs. I can’t seem to get her to respond in a timely manner and then take responsibly for the damages that she has caused. She won’t even let the Mold Inspector cut a hole in her wall to determine if and what type of mold is possibly there. She knows that she is to provide insurance for the interior of her unit and liabilities for damages caused to neighbors. How should this be handles since I can not get any help from her. I’m at the end of my rope. This is the fifth time and I can’t continue to clean up this mess and let my home and furniture be destroyed by her ignorance. She just acts as if it is no big deal. It would be if it were her personal property.

    • Dot says:

      Hello Sherry,

      I have nearly Identical problem with numerous repeated floods from negligent Uncooperative neighbor/owner of upstairs condo; I’m getting desperate too especially re Mold.

      Have you had Any luck with Replies or Info from Any websites at all?? I can’t even begin to sell my condo because every time I start doing repairs and painting, etc. I get flooded yet again. I’m at my wit’s end.


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