Neighbors House Caught on Fire and Mine Received Damage Due to the Fire...

[BigIVU]

Let's say a condo association of 100 unit owners suffers an $8,000 loss to commonly owned property and the masterr policy has a $10,000 deductible. They assess each unit owners $80 to pay for the damage. Assuming your condo policy covers the peril that caused the loss, your policy pays the assessment less your deductible. Since you likely have a deductible of $250 or more, your policy won't pay anything and you have to pay it out of your pocket.

It's not only the ISO HO-6 condo form that has this loss assessment coverage...other forms do too. You may insure your single family home with an HO-3 policy but you are part of a homeowners association that has commonly owned property like a club house, pool, etc. The coverage is not just for condos.

AND all of the ISO forms have a similar loss assessment coverage for liability claims which can easily exceed the liability limits often purchased by the HOA.

The $1,000 limit in the policy can be increased by endorsement, typically to $25K - $50K. A friend who is an insurance trainer purchases the maximum liaiblity loss assessment coverage his insurer sells and the additional cost is something like $20.

 

[joebob]

If commonly owned property is damaged, on what basis do they charge you individually with the responsibility to have it repaired?
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P.S. The bad news is that the property loss assessment coverage is usually subject to the policy deductible for each condo owner. The good news is that, if there are a significant number of common owners, the assessment is usually not that great.

***
i only have my own HO-6 coverage for the interior of my condo, and the HOA insurance i pay through dues that is supposed to cover the exterior of my condo and all common areas in the complex. i guess LA is something extra i don't have.

my deductible is for the interior stuff. the HOA policy deductible is for the whole HOA, not each unit, and is $5k. in this case the total damage to the common area fence and the exterior of my unit does not meet the HOA deductible. if more units had been damaged (externally) it would probably be over $5k and no problem, so in a way it's bad there was not more damage. as it is now they want me to pay out-of-pocket for the external damage to my unit since it does not meet the HOA deductible. in my opinion, the HOA should have a fund or some other way to pay relatively small costs like this, it shouldn't be me having to worry about it.

as to the damage to the common area fence, they have no legal reason to ask me to pay for it, it's just easier for them. they figure if i'm fixing damage to my unit might as well do that at the same time. of course i am not going to do it if i can avoid it.

 

[BigIVU]

Usually the property deductible on your policy applies to all of the property coverages provided by your policy unless expressly exempted...some additional coverages are not subject to the deductible but the Loss Assessment coverage is on an ISO homeowners form.

Who exactly is telling you that you alone are responsible for paying for this damage? Is it an association officer, the master policy insurance agent or adjuster, etc.?

 

[joebob]

an officer of the property management company that takes care of our HOA has told me they won't file on the master policy as it does not meet their deductible, and therefore i am liable. so they are basically saying any damage that ever happens to the exterior of my unit, but is less than their deductible of $5k, will be up to me to pay.

even if they make an assessment my HO-6 deductible is $1k so wouldn't be met anyway. but that's no big deal, i'd happily pay a small assessment to let everyone share the financial pain.

personally i think they should have an emergency fund to cover the master policy deductible in a case like this. or, as several people have said, make an assessment on all HOA members for the repairs.

i'm just trying to get a better understanding of what is legal and normal, things like doing an assessment, so that when i speak at the HOA meeting in a few days i can argue in an informed fashion. i hate the idea that any little damage to the exterior could surprise me each month, up to $5k which is what they decided should be the master policy deductible (even though i, as an HOA member, am the one paying for that master policy).

 

[BigIVU]

If the exterior/structure of the building is common property, why is it "your unit"? I assume the building(s) is(are) jointly owned by all association members and not a fee simple ownership arrangement for each owner.

I'd ask to see where in the governing association documents damage to the exterior is the property is the individual responsibility of the unit owner nearest the damage.

 

[BigIVU]

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[joebob]

If the exterior/structure of the building is common property, why is it "your unit"? I assume the building(s) is(are) jointly owned by all association members and not a fee simple ownership arrangement for each owner.

I'd ask to see where in the governing association documents damage to the exterior is the property is the individual responsibility of the unit owner nearest the damage.

that's a very good point. i keep referring to it as my unit... our complex is about five physically separate buildings each of which has 2-6 units in it. however i think as you said, technically all the common areas and exteriors are jointly owned by each member of the HOA.

they have a clause that says:
Section 9.2 Damage or Destruction of Project, “A. Damage to a Single Unit”. This section of the CC&R’s states, “If the insurance proceeds are insufficient to complete the work, the owner shall pay whatever additional sums may be necessary to complete the rebuilding and repair.”

i say this does not apply as they are not filing a claim on the master policy and there are no "insurance proceeds" to be insufficient.

 

[Accelerated]

that's a very good point. i keep referring to it as my unit... our complex is about five physically separate buildings each of which has 2-6 units in it. however i think as you said, technically all the common areas and exteriors are jointly owned by each member of the HOA.

they have a clause that says:
Section 9.2 Damage or Destruction of Project, “A. Damage to a Single Unit”. This section of the CC&R’s states, “If the insurance proceeds are insufficient to complete the work, the owner shall pay whatever additional sums may be necessary to complete the rebuilding and repair.”

i say this does not apply as they are not filing a claim on the master policy and there are no "insurance proceeds" to be insufficient.

How is "unit" defined in the bylaws?
The bylaws should have clearly defined boundaries regarding common areas and the "unit". Most condo association bylaws stated that the boundary of a unit is either the interior ceiling, wall and floor decoration (paint, stain, wallpaper, carpet etc), and the rare few extend ownership to the studs and subfloor. I have never seen a set of bylaws that included the exterior of a multi unit structure as part of a "unit" with an individual owner.

If you have bylaws similar to what I have described, anything outside of the specifically described unit boundaries contained within your condo association bylaws is not yours, and thus is not your problem.

 

[BigIVU]

From a condo guru I know:

Like most such situations, the facts, the state, and the governing
documents --- all are are critical, but leaving that aside:

1. Many types of losses have external causes to the insured property, e.g. wind damage, hail damage.

2. The association should have filed the claim.

3. By not doing so, the association needs to pick up the tab for entire
loss (deductible included) for the damage (except to that part of the home defined as the owner's unit). The association's insurer then can subrogate against this other homeowner and perhaps that neighbor's insurer might have a different take on coverage. The association also can file suit against the other owner.

 

[djs]

2. The association should have filed the claim.

Why?
If you know the damage isn't going to surpass the deductible, this is a total waste of time.

Dan