Written by Chris Majerle, PCAM on August 13, 2020
Community Management Edition
One of the more confusing aspects of condominium living is the master insurance and who pays the deductible in a claim. What it boils down to is the source of the damage. As an owner, you pay assessments that are determined by the budget. The budget includes various kinds of insurance. So, you are insured by the condominium master policies, but there are limitations.
Both Maryland and DC have provisions in the law requiring the owner to make repairs to the unit and the association to repair the common elements, but that blanket statement does not apply when the damage is caused by an insurable event: fire, sudden pipe break, storm. In these cases, the master policy repairs both the common elements and the units (except betterments and improvements—things you or a previous owner have added or upgraded). If the damage originated from your unit, you pay the master policy deductible up to $5,000 in DC and $10,000 in Maryland (effective 10/1/20).
You can and should purchase a condominium owner’s policy to cover your unit—especially betterments and improvements and your personal contents. The condominium documents may require that you purchase insurance.
Let’s Look At Some Examples:
- Your toilet supply line breaks and floods your unit and three others. The damage totals $40,000. It was your toilet, so the damage originated in your unit. You pay the deductible and the master policy pays for the rest.
- A storm tears off portions of the roof damaging five units with a repair cost of $18,000.The association pays the deductible and insurance pays the rest
- Your AC condensate drain gets blocked and a leak causes $2,500 in damage to the unit below. This is an insurable event, but the cost is below the deductible. You pay the entire cost.
- Heavy rains cause water to come through the foundation and your unit’s carpet is damaged, or the roof leaks because it is old. Unless the association has flood insurance, this is not an insurable event. The association should take steps to keep this from happening again and you repair your unit. However, if the association does not make a reasonable effort to repair the root cause of the damage, the liability for repairing your unit could shift to the association if the event happens again.