Condominium Insurance Basics

Maybe it is the weather, but we have been receiving a number of questions about condominium insurance coverage as between the common elements and units.  Here is a summary:  A condominium master policy must, at a minimum, cover property damage to all of the condominium structure, including both the common elements and units as originally constructed and finished by the developer, with the unit owners providing individual insurance for their improvements and personal contents.  Section 11-114 of the Maryland Condominium Act states that the council of unit owners is required to maintain insurance “[f]or property and casualty losses to the common elements and the units, exclusive of improvements and betterments installed in the units by the unit owners other than the developer.”

During the 2009 legislative session, the Maryland General Assembly took action on the issue in direct response to two Court of Appeals decision concerning the allocation of responsibilities for property damage between a condominium council and the individual unit owners.  The revised law established that the condominium master insurance policy must cover all of the building elements, including the units, except for improvements installed in the unit by the owners after construction.  However, where the damage originates in a unit, that unit owner is responsible for any insurance deductible under the council’s policy, up to a maximum of $5,000.  The new law amended Section 108.1 to make it specifically subject to the provisions of Section 11-114.  It then amended Section 11-114 to make clear that the council of unit owners is required to maintain insurance “[f]or property and casualty losses to the common elements and the units, exclusive of improvements and betterments installed in the units by the unit owners other than the developer.”  The amended law also imposes the deductible requirement on any individual owner in whose unit the damage originates, regardless of whether the bylaws so provide, up to a maximum of $5,000. Otherwise, the deductible remains a common expense.  The result is that condominium master policies must cover property damage to all of the condominium structure, including both the common elements and units as originally constructed and finished by the developer, with the unit owners providing individual insurance for their improvements and personal contents.  If damage originates in the unit, the owner is responsible for the insurance deductible up to a maximum of $5,000.

23 Comments


  1. So in regards to your last post, if the problem started from outside ( water leak) is the condo owner still responsible for the deductible and if I understand if you,if you have a broken pipe inside the unit the condo owner is responsible for up to the $5,000 deductible.

    Thank you again for your great posts and time you put into these. Your posts have always been a wealth of information.


    1. If the water intrusion originates outside of the unit space, the owner is not responsible for the insurance deductible. Generally, if it originates from a source inside of the unit, the owner will be responsible for the deductible up to the maximum of $5,000. In some cases, however, plumbing (and also mechanical and electrical components) that passes through a unit may still be a common element, in which case the owner is not responsible unless his or her negligence caused the problem.


  2. My remodelled walls and the area around the pipes were fully insulated, the plumber said a draft from below or in the exterior walls and roof from the unit below likely caused the pipe to freeze and that he had not ever seen a valve blow off like this. And, the way the pipes were protected by insulation, cabinets and walls it is impossible for it to freeze from the inside of the unit, The valve was under my sink and that was the weakest point and also the end of the pipe on a third floor of a 3 floor building. Who is responsible?


    1. A qualified professional would have to determine whether a given problem had its source outside of the unit. Your plumber appears to indicate that. In the absence of a contrary finding, this should be considered by the council in establishing insurance responsibility.


  3. Thank you so much for this great information.

    Who is responsible for water damage caused by a broken sprinkler head located outside of the unit?

    I live in a condo in Maryland. A sprinkler head outside of my unit in the utility closet on my balcony, broke off causing extensive damage to my unit and the unit below me. The fire department, the water mitigation company dispatched by property management, and the HVAC guy stated that the association is responsible for the damage and repairs. Now property management is asking me if I contacted my insurer, stating, “…your bylaws does not make the Association responsible or liable for the malfunction of the sprinklers.” But from what I’m reading in this blog, according to Maryland Law, the condo association is in fact responsible for the damage, repairs, and the $5,000 deductible. Is this the case?


    1. The answer to your question is determined by the condominium’s governing documents. If the sprinkler system is a common element, as defined by the governing documents, the council of unit owners is responsible for all costs. If the sprinkler is part of the unit, the unit owner where the sprinkler burst is responsible, but only for the insurance deductible, and only to a maximum of $5,000.


  4. Regarding the $5000 deductible, our HOA has not notified the owners of this change to the provisions of the Act, our bylaws state $1000 maximum. Can we just start assessing the $5000 or are we required to notify them of the change first? Thanks very much,
    Ann Yonkauski


    1. Section 11-114 of the Maryland Condo Act provides that a unit owner’s responsibility for the council’s deductible is “not to exceed $5,000.” Accordingly, it can be less. If your Bylaws provide for a maximum unit owner responsibility of $1,000, that would govern. The Bylaws would have to be amended to provide for a higher figure.


  5. The unit above ours was left unheated, with nighttime temps near zero. I emailed and text-ed the owner repeatedly that this was dangerous, at least she should have the property winterized, or at least just shut off her water main. She simply said her “property manager” would take care of it. A few days later, Lo and Behold! a pipe broke in her unit, flooding her unit, and totally destroying my unit below. In light of this obvious negligence, would the master insurance still pay? And if so, could the condo association eventually pursue her for reimbursement? I had a better than builder-grade kitchen and feels that if she ruined it, she should replace it. Hopefully someone knows more about these things than I!


    1. The unit owner above is legally liable for your damage. The condo’s policy likely covers the restoration of your unit to the condition it was when constructed, but may not cover your additional improvements beyond builder grade. The unit owner above is only responsible for the condo’s deductible up to a maximum of $5,000. The remainder of the damage not covered by the condo’s policy can still be recovered from the unit owner, and also my be recoverable from the unit owners howeowners policy. Additionally, your homeowners policy my provide coverage, and your insurer my pursue a subrogation claim against the unit owner above.


  6. Is the Condo Association required to have a $5,000 deductible (picking up where unit owners insurance leaves off) or can they have a deductible of $10,000 or greater? What is the Condo Association has no reserves and they are unable to make repairs (their responsibility) to units?


    1. The $5,000 deductible limit applies to the responsibility of an individual unit owner when damage to the condo originates in their unit. Under Section 11-114 of the Maryland Condominium Act, the condo council is required to maintain insurance on the entire complex. There is no limit on the deductible. The council is also required to maintain reserves as part of the budget through regular and special assessments.


  7. The unit owner above me left a tub running and the water eventually flooded into my bathroom causing damage to the ceiling and the in-ceiling fan. I have contacted the HOA and they refuse to pay the damages because the totals are below the $5,000.00 deductible. They have told me its between me and the unit owner. The unit owner’s insurance policy doesn’t cover my damages either. Do I have a legal right to sue her for payment?


    1. Your governing documents should be examined to determine if there is any applicable provision relating to reliability of this nature. Generally, there is a right to recover damages from the owner who is responsible, minus any insurance paid.


  8. Unit above mine had a water leak that caused extensive damage to my new cabinets just installed 1 month prior. Master policy denied any coverage because there is no coverage for improvements or betterments installed by unit owners. Is the unit that caused the leak still responsible for the master policy deductible and my policy for the rest. Or does my policy pay for all.


    1. One would have to read your governing documents to provide a definitive answer, but, generally, the party responsible for the damage remains liable for resulting damages minus insurance paid.


  9. If a a water leak from one Unit causes lots of water and resulting mold damage to the Unit below. There is a requirement for the COUO to repair the damage and abate the resulting mold. The damage-causing owner does not have the personal funds or insurance proceeds to cover the Master Policy deductable but because of the severe water damage. The cost of the repairs is will is being charged back to the owner as an assessment to that owner. Can the COUO charge interest on the amount they paid out of pocket to repair, otherwise it would essentially be an interst free loan, which they may not repay.


    1. One would have to review your governing document to provide a definitive opinion, but assessments are generally all subject to interest and late fees, unless waived by the Council of Unit Owners.


  10. A unit in our Condo in Maryland suffered damage during Hurricane Sandy, and repairs cost $2,355 to repair the damage. The owner of course did not cause Hurricane Sandy. It is claimed the personal insurance of the owner didn’t cover the damage, and the Condo’s insurance would not cover it either. The owner of the unit claimed the Association should pay for damage. The deductible the Association has is $5,000.

    I believe the owner should pay for the damage not the Association. What are your thoughts?


    1. Without reviewing the condo’s governing documents and insurance policies, it is difficult to provide any definitive analysis. The fact that the damage was not covered begs the question of why the condo did not have insurance coverage for this damage. Under Section 11-114 of the Maryland Condominium act, a council of unit owners is required to have property insurance coverage on the common elements and units “against those risks of direct physical loss commonly insured against.”


  11. A water pipe froze and broke between the main input and my unit causing a leak over the garage area. As the break was outside my walls, even though it was the feed leading to my unit, isn’t the Condo Association liable for the repair?


  12. As an association, how do we enforce the requirement for unit owners to have insurance or pay the first $5000 of damage to their and other units? In two cases the owner failed to buy condo insurance of his or her own and a serious issue arose in their unit (big leak, stovetop fire by child).

    Then, how do we collect the amount owed, which is not covered by the master insurance? We can put a lien on the unit, but one of our board members told me the court would not do anything for us because “the court will not give us a $200,000 condo for a $5000 debt.”

    When the association has to pay up front, the association has to collect from the source-unit’s owner. In effect, this means that our owners who act in good faith bear the cost of those two $5000 worth of payments needed. The residents who don’t get personal condo insurance simply won’t pay for any of it.

    Is there another way to collect this money or at least prevent more problems in the future? It’s incredibly frustrating as a responsible person who owns a condo.


    1. There are certain avenues to require that the unit owner pay their share of the deductible. However, much depends on the content of your governing documents, and a full response to you question requires a review of those materials. You should retain an attorney to review your governing documents and provide appropriate advice.

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