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Real Estate Matters: Condo owner denied insurance coverage for unit damage caused by sewer pipe burst in building

Ilyce Glink and Samuel J. Tamkin, Tribune Content Agency on

Q: I live in a highrise condo building. Recently, a sewer pipe burst outside my condo between units. The water caused a substantial amount of water damage to my kitchen and the floors in my unit.

The condominium association has been in the process of repairing the pipe and fixing the walls but they won’t repair my kitchen or my floors. I put in a claim with my insurance company, but they have denied coverage. They claim I didn’t purchase a backup sewer endorsement coverage to my policy. My insurance agent never offered me that endorsement coverage. What should I do?

A: It’s an interesting question. And, quite unfortunate that your insurance agent didn’t offer you an endorsement to your policy, which would have covered you on the damage you sustained. But more on that later.

Let’s start with how condo buildings look at insurance: yours and theirs. When you live in a condo building, the association’s governing documents usually provide that the association will not be responsible for any damage to the interior of the individual units nor for any of the owners’ contents in those units. It is precisely for this reason that associations generally will require homeowners to carry a homeowners insurance policy that will protect them from damage and liability claims if they cause damage to other units.

If you live in Florida, as an example, you are keenly aware that you can have water damage that comes from storms like a hurricane. You also know that water can come in through the windows or from other units. So, homeowners in Florida make sure that their condo insurance coverage covers them if water comes into the unit during a storm. They also know that if they don’t have that insurance coverage, they’ll have to pay for the damage out of their own pockets.

Homeowners who live in cold-weather climates worry about water from water pipes that freeze, burst, break or from sewer lines that back up and from roof, window or wall leaks. When you purchase or renew your condominium insurance policy, you’ll usually buy a policy that covers you from the drywall in — meaning that your insurance should cover any damage to your unit within the perimeter walls of your unit.

 

Your condominium insurance needs to cover you for the bathrooms, floors, plumbing, electrical and heating/cooling fixtures in your unit, along with kitchen and laundry appliances, kitchen and bath cabinets and all other improvements within your unit. Basically, you have insurance for everything inside your unit and the association is responsible for the structure of the building outside of your unit.

It looks like your insurance coverage had a gap in it. Many insurance companies carve out certain issues such as floods, earthquakes and war from their insurance coverage. But frequently, they also exclude coverage for certain types of issues, such as sewer backups, sump pump problems and other similar water issues.

When you purchase your insurance coverage, your insurance agent should have offered you all of the other protections. You could have then asked questions about the limits of these coverages and made a decision whether to add them to your policy. We’re sorry to hear that you were never even offered the coverage. While we don’t know what your policy terms provide, we suspect that your insurance carrier denied your coverage because you didn’t have backup sewer coverage.

As a buyer making an offer for a condo in a high rise building, you might not have realized that a sewer backup could be a problem. That’s understandable. We usually think of backup sewers in conjunction with basements that flood with sewage due to a storm or a break. But there’s also water that rushes into a property through an open sewer line, and that can happen in a condo. For example, a waste stack backs up with a blockage and water rushes down the stock, hits that blockage and finds a way out through a toilet, sink or shower drain.

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