In this final installment detailing the fallout from the black water emergency at my condominium, I wanted to talk a bit about insurance and paying for repairs. Now, I can’t go into specifics about our particular issue, because it’s still an open investigation, but I can explain some generalities that will apply everywhere.
In most states, Florida being among them, condominium associations have a legal responsibility to protect and repair the common elements. As those of you who read New Neighborhoods may remember, common elements, or common property, are loosely those areas of a building or neighborhood that are owned jointly by all unit owners and managed/operated by the association. In addition, many states have laws that require associations to insure those common elements, as well. When a disaster occurs, it is the association’s legal responsibility to repair the common elements, whether it’s paid for by insurance or not.
So in the case study that we’ve been discussing, the black water leak will require replacement of insulation and drywall, both elements that are the association’s responsibility. We are required to build out the units, essentially, to bare construction standards–concrete floor and bare walls. Now, it’s important to recognize that certain items that were part of the development when it was sold, like cabinetry, are specifically exempted from the association’s responsibility. Those, often expensive items go on the unit owner’s personal insurance policy. And what if the owner doesn’t carry insurance? Well it either comes out of their pocket or it doesn’t get replaced. If you own a condominium, it’s critical that, unless you’re independently wealthy and can afford to completely gut and rebuild your home, that you carry enough insurance to cover not only your personalty, but replacement of flooring, cabinets, window treatments and any other added elements.
As for the association, even if they are insured, not all hazards are actually covered by insurance. Water damage may be exempted in some policies, covered in others. When you make your annual insurance decisions, make sure you discuss the pros and cons of different policies and their coverage, not just the bottom line price of the policy. Taking that policy that saved the association 10 grand is going to look really short-sighted when the association is stuck covering a 100 grand remediation. It happens all the time.
Ultimately, it’s the owners that foot the bill whenever there’s a disaster. Even if there’s insurance, there will be a deductible, and if the insurance doesn’t kick in the owners and the association STILL have an obligation to repair the property. It’s just part of the deal when you live in a shared ownership community.
I will keep everyone posted as we progress, and I hope you enjoyed this series! Here’s wishing that you never have to deal with anything like this in your own neighborhoods.