What Does Your Insurance Cover?

shutterstock_158233841A pipe breaks in an upstairs condo, and the leak damages the roof of the downstairs unit. The downstairs tenant demands that someone pay for the damage. The upstairs tenant says it’s the HOA who should cover it. And, the HOA says that it’s not their responsibility. Who’s right? Is the damage covered by homeowners’ insurance? Should the association have to pay at all?


HOA Insurance and Damages


Instances of damage like this are always touchy subjects, especially for the homeowners who had their property damaged by problems in other residents’ homes. They’re going to want compensation, and they’re going to want it as quickly as possible. Meanwhile, the other resident is going to try as hard as possible to not cover expenses related to someone else’s property.


There are several things that should go into determining whether or not the HOAs should be made to cover damages. If the damage was unequivocally caused by the negligence of a resident, or the malfunctioning of items that are a resident’s sole responsibility, then the association should absolutely decline to cover the costs. In those cases, the HOA should encourage the aggrieved resident to seek damages against the responsible homeowner.


In cases where culpability is less cut and dry, or it turns into an ongoing conflict, the association should always consult with their legal council before committing to pay for anything. Homeowners insurance usually doesn’t cover damage that occurs outside of the policy holder’s home, but that doesn’t mean that the resident is relieved of the responsibility to cover that kind of damage. When the HOA is not responsible for the damage, they should still encourage the property owners to come to a solution, and for the responsible party to pay their share even if their insurance doesn’t cover it.


Adopting Maintenance Standards


An HOA can further protect itself against maintenance costs by publishing maintenance guidelines for items that are likely to fail over time and cause damage. This includes water heaters, pipes, and water lines. By clearly outlining and distributing these maintenance standards to residents, it sets out what homeowners’ responsibilities are in terms in maintaining them, and when they will be held responsible for any damage they cause. If your HOA hasn’t set out these guidelines previously, it may find itself paying when these items malfunction. Update the maintenance standards for your condo or community to prevent having to cover them with your insurance in the future.


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