Published: April 2015
You may have bought your condo because you liked the idea of low-maintenance living. But having to take care of water damage likely never played into that fantasy.
It can happen, though. And it can turn into a big headache if you’re not prepared.
If you have condo insurance, however, you’ll find that you’re generally protected against water damage that is caused by your plumbing, your water heater or appliances, or from your heating or air conditioning systems, says the National Storm Damage Center.
The cause must be accidental, however, and not the result of wear and tear. For example, if your water heater is past its prime and it cracks and leaks water all over your floors, your condo policy likely won’t cover the cost of buying a new one (keeping appliances in good working order and replacing them is considered basic maintenance when you own a place). You may find, though, that your insurance will likely cover the damage done to the floors. Check with your agent to learn about any limits or exclusions in your policy.
Either way, it’s important to know that there are some types of water damage that normally aren’t covered.
Take sewer or drain back-ups. If you’re looking for safeguards from these risks within your unit, you may have to tack on an additional “water back-up” coverage because it’s not always part of a basic condo policy, says the Insurance Information Institute (III). Your agent can tell you whether this type of coverage is available in your state.
Floods are another example. Because condo insurance typically doesn’t cover flood damage (homeowners insurance doesn’t either, by the way), you’ll need a separate policy for protection against flood waters.
Of course, you’re not just limited to these risks. Because you live in a community-type dwelling, you’re susceptible to other sources of water damage. Like your neighbors. For instance, what if a pipe bursts in the upstairs unit and it leaks down into your own - what then?
Most likely, each of your insurance policies will come into play, with your insurer helping to cover damage to your property and your neighbor's insurer paying for theirs. However, if it can be proven that there was some sort of neglect that caused the damage, your insurance company might ask your neighbor’s insurance company for reimbursement.
In some instances, the water may come from the condo building — from its roof or one of the common areas you share with your neighbors. In that case, your association’s master insurance policy is likely designed to provide coverage. Of course, it all depends on exactly how the association’s master policy is written. And the protection may or may not extend to the inside of your unit, says the III.
The only way to really know what's covered is to ask for and review a copy of your condo association's master insurance policy and any condominium documents such as your association's declarations and bylaws (ideally before a problem occurs, so you can adjust your own coverage to fill in any gaps).
So, while condo living may not be as carefree as you once thought, you can do a little planning to protect yourself against the risks and still enjoy the lifestyle you were originally hoping to achieve.