Water heater damage and Insurance

Water heater damage is a common condo issue

newsQ: Our HOA’s insurance is not being renewed due to our loss experience, which is mainly due to water heater failures and the resulting damage to one or more units.

Can we amend our governing documents to require that the homeowner’s personal insurance will be the primary insurance and the condo association’s insurance will be secondary? Could we amend our Declaration to provide that damage to units due to leaking water heaters more than eight years of age, for example, will be the responsibility of the unit owner?

Damage due to aging water heaters is a very common and serious problem for condominiums, since the leaking appliance often will flood not only the owner’s unit, but also those adjacent to or beneath his unit. The water can also cause significant damage to common elements.

The N.C. Condominium Act became effective in 1986. Only certain provisions of it apply to pre-1986 condos, and the insurance provisions you have cited in your letter do not.

Since the insurance provision you cited does not apply to your condominium, you must look to your Declaration to determine whether the HOA’s or the unit owner’s insurance provides primary coverage, since the older Unit Ownership Act does not state which coverage is primary. If your Declaration is silent on the issue, then there is no clear directive as to whose insurance is primary.

Based on your loss experience, it would probably be wise for your HOA to adopt an amendment to your Declaration stating that the owner’s insurance coverage would be primary for any damage to the units themselves.

The HOA’s coverage would only apply if the owner did not have coverage, or the coverage was insufficient to pay for the damages to the unit. Alternatively, you could add language that says that the HOA’s insurance would only cover the common elements, and would not provide any coverage for damage to units.

To take it one step further, you could even add language expressly addressing water heaters, stating that owners would be responsible for any damage to common elements or other units as the result of leaking or bursting water heaters that are more than a certain age. However, it may be difficult to determine the age of the appliance if the owner does not have a record of it.

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“Ask The Experts” Articles have been Reprinted with permission from the Charlotte Observer

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