Maryland Insurance claim for damaged carpet in a Maryland condo

[Jim Kalas]

Can an agent familiar with the Maryland Condo Act please advise me on how best to proceed.

I recently closed on a condo and soon after a leak in the the unit above me caused a flood which affected his unit, an adjacent unit and my unit.

The property manager of my condo has advised that it appears the damage claims will be well over $5,000 and that they will have to decide whether the condo association will pay the claims out of their funds, and not make a claim on the community's insurer, because of concern for a future rate hike.

The damage to my unit was limited to a room of carpeting which Servpro has advised is not salvageable. My insurer has a 1,000 deductible so I will not file a claim on my one month old policy, because the carpet replacement will cost a little over 1,000

My question is how to best proceed with my claim.
The offending unit owner's insurance carrier advises that their liability in a claim over $5,000 will most probably be to pay the condo association $5,000 and that the other parties with damage claims will have to make them against the condo association's insurer.
Should I replace the carpet now and send a bill to the community association?
Any advice by a knowledgeable agent on how to best resolve my claim will be greatly appreciated!

 

[adjusterjack]

I'm a retired property claims adjuster. I handled many hundreds of condo water damage claims and they are complicated.

I'll point out a few things but I'm not sure I have a solution for you.

I hope that, by now, you have had the carpet and pad removed from the condo lest the wood floor under the carpet be damaged.

You wrote

a leak in the the unit above me caused a flood

And referred to

offending unit owner

Why do you, or anybody else, feel that the upstairs unit owner is responsible? Was he negligent in somehow causing the leak/flood? That it came from his unit doesn't mean he is negligent. If the leak/flood was sudden and unforeseen, then he wasn't negligent and his insurance should not be paying.

parties with damage claims will have to make them against the condo association's insurer.

Whether the condo association or its insurance pays depends on the definition of "unit" that appears in the CC&Rs. If the carpet is defined as part of the "unit" then it's up to the unit owner to take care of the cost if nobody else is responsible. If the carpet is defined as part of "common elements" then it's up to the condo association to pay for its replacement either with its funds or through its insurance.

See, I told you it's complicated.

Bottom line, you need to replace your carpet no matter who pays for it or who doesn't pay for it. Right now there's a lot of "what ifs" going around and I don't imagine anybody's handing out any money yet.

the carpet replacement will cost a little over 1,000

You have a written estimate? If not, get one.

If you do, submit it to the other unit owner's insurance company and ask for the money. If you get the money, fine. If you get a "no" turn it in to the condo management and ask for the money. If you get the money, fine. If you get a "no" then you'll know that you are on your own.

The thing is, you get nowhere until you ask somebody for the money.

Feel free to come back and report the results.

 

[fed up]

Chances are that the condo assoc has a $5000 or higher deductible for damages to their property. By law in Maryland that amount is currently capped at $5000 to you and would fall under your Extended Premises coverage. your repair is just over your personal policy deductible of $1000. I would not worry about being reimbursed or filing a claim. if the leak (it is not a flood) was caused by pipes that the condo assoc is responsible for, see if they ask you for any receipts for damage. If the leak was caused by the neighbor overfilling a tub, or poor drainage from the shower, or a toilet overflow then contact his insurance carrier. It will be up to their claims department to decide if his negligence is the cause for your loss

 

[Reesec3]

I am aghast at the erroneous comments made by the adjuster. Unless your condo was built prior to 1982.......ALL MD condo units are protected by the master insurance policy. The master policy deductible (by law) can be assigned to the unit where the insured damage originated. The assessment of the master deductible against the unit where damage originated can have the assessment paid by their HO6 policy.

The master association insurance policy covers a he common elements as well as the units to replace with like kind and quality as originally constructed. Only the upgrades made to the unit are insured by the HO6. Therefore if your carpet was a vanilla avg grade carpet when the unit was constructed the master policy only owes for a like kind replacement or repair. If the carpet has been upgraded to a high end carpet the addl value or cost for the higher grade is paid by the HO6 policy.

The agent for the association should be able to help explain these matters. I hope this helps. By the way, the deductible assessment has been a max of $5,000 for many years and as of Oct 1 it will be increased to a max of $10,000.

 

[InsCommentary]

From an expert:

As an 11-year member of the Maryland Legislative Action Committee (MD-LAC), I worked on the 2009 law that effectively shifts responsibility for the Master Policy’s property damage deductible (not to exceed $5,000) to the unit owner in whose unit a loss originates (or from a component that services only that unit). Maryland law will be changing effective October 01, 2020, increasing owner responsibility not to exceed $10,000; the Association’s Property damage deductible will need to be at least $10,000 in order to realize the maximum benefit, of course, but Associations are not required to increase their deductible.

For this loss, which obviously took place already, the owner above you who caused the loss pays the first $5,000 of the Master Policy’s deductible (even if the policy is subject to a higher deductible; the Association would pay the balance of a higher deductible). It’s not clear what the Association’s deductible is from the post.

Deductible responsibility in Maryland is not negligence based, but rather based on point of origination. Your neighbor above you caused the loss (or originated in the unit or from a component servicing that unit), so he/she pays the first $5,000. The first $5,000 cannot include any damage to improvements and betterments, alterations or additions or contents/personal property (or content manipulation) to your unit or any other affected units. Maryland is a single entity state, therefore the Master Policy pays to repair/replace the units as the developer originally conveyed them (original grade floor, ceiling, and wall coverings, counters, cabinets, appliances, fixtures, and equipment). Any damage to improvements and betterments would need to be filed with your own carrier and then your carrier has the option to subrogate (go after) your neighbor’s policy for recovery.

Your Association does have the option of not filing a claim (and many Associations with troubled loss histories elect to pay for losses out of pocket), but they would need to pay the loss amount in excess of the $5,000, which would otherwise be eligible for insurance proceeds. The waiver of subrogation in the condominium act and the primacy of the Master Policy likely prevent the Association from collecting anything more than the initial $5,000 from the owner where the loss originated.

If your carpet is not salvageable and is original grade, coverage would be subject to insurance proceeds (and subject to the deductible responsibility). You should not be out of pocket for the carpet at all unless the carpet is an upgrade and even then, insurance would likely provide an allowance for original-grade carpeting.

Your own policy is limited to the following:

1) Improvements, betterments, alterations, and additions

2) Personal Property/Contents (including content manipulation during restoration)

3) Loss of Use/Additional Living Expense (pays for you to live elsewhere for up to 12 mos during the period of restoration; this limit is usually 50% of the personal property limit

4) Personal Liability

5) Your deductible responsibility in the event a future loss originates in your unit

6) Loss Assessment


I’m happy to talk with you personally if you need assistance.

Robin Manougian, Agent (MD, DC, VA, DE)
Insurance Chair, MD-LAC
[email protected]