Landlord Tenant Q&A

CATHERINE M. MATTHEWS (R), GRI
Broker-In Charge, Callahan Realty, Ltd.
Past President, Oahu Chapter
National Association of Residential Property Managers

Q. I own a condo unit in a high-rise. I recently had a pipe that leaked behind the wall and caused significant damage to the unit below mine. The pipe serviced only my unit. There was no evidence of the leak in my unit and I had no damage at all. I have Homeowner’s Insurance, a HO6 policy as I was told to get by my Association. My insurance company has denied the claim because they said I was not negligent in any way and could not have known about the leak. My condo association said according to some condo law I am responsible for damage to the other unit up to $5,000 or more. Can this be possible?

A. Unfortunately, it can be possible.

I have personally seen this happen. All insurance is not created equal even when you think you are doing everything you can to protect yourself. Your association’s deductible is $5,000 which is why they are holding you responsible for that amount. State Condominium Law, HRS 514B-143 allows your association (through its Board of Directors) to hold each unit owner responsible for the deductible amount of the association’s policy if their unit caused the damage to others or common elements. If the unit owner does not pay, the association can assess the amount and place a lien to foreclose on the property. Your condo association’s master property policy will pay for damage to the building in excess of the deductible according to the “as-built” plans.

There have been companies that have denied liability stating that if there is no negligence there is no responsibility or coverage under their particular policy. Then there are other companies that consider the same situation a covered claim because it is your unit and their policies are written that if you own it you are covered regardless. This is a great question to specifically ask your insurance company.

Additional things to ask your insurance agent about are: Is mold that may occur covered? Some companies provide coverage as a standard part of their policy, others provide no coverage, some do but only if you ask and add it to your policy. Are you covered for loss of rental income if your tenants are displaced while you make repairs due to a covered claim? Do you have coverage in case of a hurricane? Even if you are not in a flood zone as defined by FEMA, you may want to consider flood insurance if you live in a wet area or a hillside (maybe any location). The definition of a flood to an insurance company is different than in my mind and probably yours too. Ask your agent if there is anything they can think of you may want to consider. These items are spelled out in your policy; however, they can be difficult to understand if you do not have an insurance or legal background.

Insurance is a competitive business. I suggest finding a company that has agent(s) you feel are trustworthy, that are accessible and will answer specific questions about your personal policy, not only generalities. We have many excellent insurance agents in our State and I am not one of them. My answer to this question is not insurance advice. I am hoping that it will prompt you to call your licensed insurance agent and ask questions to be sure you have the coverage you need and the coverage that you think you have.

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