YANML but should I get one? Condo Nightmare edition
December 1, 2015 6:48 AM   Subscribe

Up until now I've been blissfully ignorant of the workings of homeowner's insurance and condominium law. Now I have no ceiling and I need some help from someone more knowledgeable than me.

We live in a 12 unit condo in Chicago. A couple weeks ago our upstairs neighbors kitchen cabinets collapsed and tore his sink out of the wall flooding our condo below. We called our insurance company and they sent people out right away to assess the damage and start fixing things. It sucks having everything under construction having to miss work/lose income to deal with coordinating everything but I figured everything would be fixed soon and we wouldn't have to pay anything because it wasn't our fault, right? Wrong.

I had assumed our insurance company would take care of things and recoup their losses from the upstairs neighbor's insurance. But apparently the upstairs neighbor's insurance has advised them that the cabinets are the responsibility of the building because the date back to a building wide remodel in the 1970s when the building went condo.

So okay, whatever, as long as some insurance covers it, right? But I spoke to someone on the condo board yesterday and they made it sound like they didn't think our building insurance would cover it either. I don't get that. If the unit owner's not responsible, shouldn't the building insurance cover it or vice versa?

Anyway, the condo board's apparent solution is a special assessment. The repairs are currently estimated at $30k, so it may be as much as around $3k a unit. I get the feeling they don't plan to even try very hard to get insurance to cover it - they say it will be too much of a legal battle.

I know I am not eager to pay a $3k assessment for nothing but having the misfortune of living under a hoarder and I know a good percentage of the other unit owners are on a fixed income and would not be able to pay $3K.

I don't understand the other parties' motives here. Why does no one want to let insurance do what it's supposed to do?

The building has a lawyer. Should we lawyer up as well? Should I tell our insurance company what I think is happening and ask them for advice?
posted by Brain Sturgeon to Law & Government (12 answers total)
 
The building has a lawyer. Should we lawyer up as well?

Yes, immediately.
posted by Itaxpica at 7:06 AM on December 1, 2015 [10 favorites]


Over $3k? Well, just keep in mind that that's 10 or fewer lawyer hours.
posted by salvia at 7:22 AM on December 1, 2015 [1 favorite]


Stop talking to assholes. Get a lawyer. I'm confused as to why YOUR insurance isn't advising you here? But no matter. A lawyer will help you figure this out.

Keep track of your missed work. It's possible you can get that, too, IDK? It's worth keeping track and documenting every inconvenience and expense.
posted by jbenben at 7:24 AM on December 1, 2015 [2 favorites]


Reading fail. YES. You should definitely get your insurance company involved.

BTW, this board member is not the building's insurance company, so I don't know why they think they know what's covered? That's weird. You can submit the claim to the building's insurance directly yourself, or have your insurance company submit it on your behalf if it's their policy to assist with that.

It sounds like this board member doesn't know how insurance works and is maybe trying to avoid a claim, but that's what insurance is there for.

Do you have a deductible? That should figure into your strategy, too. Anyway, call lawyers who specialize in insurance and do some quick phone interviews. Go see a few that you like. Call your insurance company and get their opinion. Somewhere in there you will figure out the right strategy for getting this covered.
posted by jbenben at 7:31 AM on December 1, 2015 [2 favorites]


Response by poster: I'm confused as to why YOUR insurance isn't advising you here?

Well, a lot of this information just came to light last night. I'm ALL for letting our insurance company advise us/handle things - but my husband (who is just as ignorant as me in these matters) was concerned that if we told them what we thought was up, they might halt repairs for for fear they wouldn't be able to recoup their money. They wouldn't/couldn't do that, right?
posted by Brain Sturgeon at 7:35 AM on December 1, 2015


Response by poster: And yes we do have a $500 deductible but our insurance co said they'd tried to get that back for us since someone else was at fault. (Sorry for the threadsitting).
posted by Brain Sturgeon at 7:51 AM on December 1, 2015


But apparently the upstairs neighbor's insurance has advised them that the cabinets are the responsibility of the building because the date back to a building wide remodel in the 1970s when the building went condo.

FWIW, we had a similar (though less expensive) incident in a building I own a unit in two years ago, and the damage was, in the end, covered by the insurer of the owner of the unit where the initial damage occurred. Typically, everything w/in the walls of an individual condo unit is considered to be the property of the unit owner, and fixtures like cabinets, sinks, etc. to convey with sale.

I don't understand the other parties' motives here. Why does no one want to let insurance do what it's supposed to do?

It sounds to me like your upstairs neighbor's insurance company is trying to strongarm you to avoid paying out. Part of what your insurer is supposed to do here is to slap back against this kind of thing (which is rampant) on your behalf using their know how and on-retainer legal firepower. I would start by contacting your agent and seeing if they have any useful advice before paying for an attorney or agreeing to anything.
posted by ryanshepard at 8:29 AM on December 1, 2015 [5 favorites]


Let the wheels grind with your insurance. They'll subrogate the claim and recoup for themselves, you don't need to advocate for them. You don't have to worry about how or if they get paid back. That's why you pay for insurance. Accept that the $500 deductible is the cost of doing business as a condo owner.

As for the $3,000 assessment, the condo assn. must upgrade anything that has been determined to be substandard and/or in need of repair. Don't worry about other owners and their finances, at least not yet, just figure out how you'll be paying this. Living in a condo leaves you open to assessment, and you need to budget accordingly.

If you feel that your upstairs neighbor contributed to the failure of his cabinetry, you can sue him for any non-covered losses you might have, or if the condo is at fault, you can sue them. Sue them jointly and severally, saves you a trip to the courthouse. If it's only $500, you might want to take it to small claims court. Of course you'll need to actually PROVE this, and as I said before, it's best just to chalk it up to 'shit happens' and move on with your life.

I was a condo owner and on the condo board for nearly a decade. It's like sausage, you really DON'T want to know. But I will tell you this, condo owner or home owner, you need to have a significant amount of money in reserve for 'shit gonna break', and if $3500 is a serious problem for you, it may indicate that you can't afford to be a condo/homeowner.
posted by Ruthless Bunny at 9:12 AM on December 1, 2015 [3 favorites]


Your husband is dead wrong. As jbenben and ryanshepard say, you need to get your insurance company involved and tell them everything. This is their job -- you pay for insurance for exactly this reason. They will pay for lawyers and negotiate on your behalf.
posted by crazy with stars at 9:23 AM on December 1, 2015 [2 favorites]


We called our insurance company and they sent people out right away to assess the damage and start fixing things. It sucks having everything under construction having to miss work/lose income to deal with coordinating everything

It sounds from your story that your insurance company has come and seen the damage, and that a contractor is on the job. So, you have no problem. Just keep communicating with your insurance company and contractor. You can ignore random comments from your neighbors and board members.

Seconding all the above posters.
posted by JimN2TAW at 10:54 AM on December 1, 2015 [1 favorite]


the cabinets are the responsibility of the building because the date back to a building wide remodel in the 1970s when the building went condo.

To me, this is blatantly wrong. As member of the condo association, I would be fighting hard to make sure the association and its big pockets doesn't fall prey to this. Not only for this individual case and its assessment, but for precedent of who else might sue you because their 1970s cabinets or interior plumbing fails.

Your neighbor is trying to avoid his own deductible and raised rates. His insurance company is trying to avoid paying, which is what insurance companies do. But that doesn't mean your board falls for it.

Check your bylaws, but it's almost entirely certain that anything inside the walls is 100% the responsibility of the individual owner, regardless of who built the cabinets in the 1970s.

I'd be seriously worried about your board not doing its duty to the members, if their idea is to pay it then issue an assessment.

Your insurance company should be working for you and making sure it gets fixed, yes. But they'll just make sure someone else pays, and they won't care if the neighbor turns around and bills it to the condo. It's up to you to protect yourself as a member of the association, and your insurance company won't help you that far.
posted by Dashy at 11:01 AM on December 1, 2015 [4 favorites]


I think you have fallen into one of the cracks from when your condo docs were written in the 1970s to what is typical insurance scenarios right now.

I've seen this several times. In the 1970s, the condo documents often specified that the building's insurance covered all cabinetry, sometimes millwork, and other items. However, times have changed and now condo insurance generally just covers the building structure and not the things in each unit.

Probably what happened is sometime in the last few decades your Association decided to change insurances to save money, and lost that coverage of the cabinets because no one paid close attention to the Association document requirements and just accepted whatever cheap policy was offered.

Your upstairs neighbor's insurance agent probably (correctly) wrote a policy to match the Association documents that specify that the Association covers cabinets, excluding them from the neighbor's personal policy.

What you need to do:
- Read your own condo docs to see if they specify that cabinets (and anything else) is covered by the Association's insurance.
- Find out from your own insurance what they know about your own personal policy and what gaps are there from the Association's policy and your policy, and find out if this event is covered anyway regardless of whether it was triggered by cabinets
- Find out from your own insurance if they know details on your neighbor's policy, and what gaps are missing between the neighbor's policy and the Association policy (your insurance will want to pass the buck on to anyone but themselves and they can put pressure on the Association's insurer and your neighbor's insurer)

If cabinets are supposed to be covered by your Association's insurance and they were not covered, the Association basically chose to self-insure the cabinets (hence the special assessment). OR, your board has opened themselves up to an Errors and Omissions claim. The Board should have been smart enough to cover the items as specified in the Declaration. Or perhaps your Association's agent or attorney is the one that should be filing for the Errors and Omissions claim. Someone should have been not so dumb as to willingly underinsure the building/ open the Association up to the possible expense of a situation exactly like this.

The other parts you need to do:
- Make sure your Association's old documents and modern insurance policies are matching up. You may need to amend the documents for the future to remove coverage of cabinets or whatever other weird things the 70s documents specify, or you need to contact the insurance agent to make sure that all future policies are matching to the Association documents.
- Everyone in your Association needs to make sure that their own personal policy is seamless with the Association's policy. Often it is best to have one company write both the overall Association policy as well as each individual owner's policy.
- You should probably have the lawyer go through the Association documents and update all of the old 70s things that no longer are relevant, like cabinet coverage. This will cost a few thousand dollars but it simply needs to be done. Besides removing cabinets and millwork, etc., there are possibly things in the documents that are now illegal. I know some Associations have clauses that violate the Fair Housing laws, for instance. You will probably need a large percentage of the Association to vote to accept the new updates, and it is imperative that the documents are recorded with the County or wherever your municipality records documents.


Overall, you need all of the damage repaired fairly to you, but you also have to remember that you are a member of the Association as well as the victim here. Any solution you suggest will come back to your financially (in the form of a special assessment) or political (in loss of goodwill with your neighbors). It's very tough and the best outcome is if you can get someone's insurance to cover this.
The special assessment solution seems like the Association is giving up. That's a lot of money for owners that had no role in this disaster. The Association needs to push insurance harder, and if that is a dead end, look at errors and omission coverage.

Start sleuthing with your own insurance company, and figure out where the cracks in the system are. If you can get the insurance companies arguing with each other that is probably a good thing.

Best of luck, this is not going to be a short story. And get those old documents updated right away.

And believe it or not, IANAL. Just BTDT.
posted by littlewater at 2:48 PM on December 2, 2015 [1 favorite]


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