It's that time of year again - temperatures are dropping, and if you're ever going to deal with the risk of a frozen or burst pipe, winter is when it's likely to happen. In the past, condominium association insurance policies have routinely provided coverage for Condominium property (common areas and apartments/units) when a pipe has frozen due to especially cold weather.
Lately, however, we have seen a disturbing new trend where the insurance company denies coverage because an apartment’s heat was not sufficient to prevent the pipe freeze. As a result, associations may need to be more proactive in monitoring the temperature of units into which they have no easy access.
In one case, a unit was foreclosed on by the bank and the owner moved away. The power company turned off the electricity to the unit. A pipe in the attic froze and burst. When it thawed, water flowed into the unit and was not discovered until days later. The insurance company denied coverage because of its claim that the association was negligent in maintaining the heat in that unit. While we will contest the denial because it was the unit owner’s negligence, not the association’s, that resulted in the burst pipe, the association would be better off to never have had the situation occur. The price tag for this situation? About $40,000 of damage alone, without taking into account the attorneys' fees.
Another case involves a vacation home condominium where the unit was vacant with the heat shut off. The pipes froze and burst, and a few days later they thawed out and flooded the downstairs neighbor’s unit. There is over $50,000 of damage. Despite the fact that the association has insurance and both homeowners have insurance, you won't be surprised to know that the three insurance companies are refusing to pay, arguing that the cost should be borne by anyone but themselves.
So the take away from this is that if you know that a unit is vacant and may not have heat, it may be worth taking some action to heat the units or shut off the water to prevent damage to the homes. Even if it is an insured event, everyone’s lives would be made easier by not having to deal with the leaks from frozen pipes (or with the resulting squabble between insurance companies over who has to pay for what!).
If you have any questions we can answer, please feel free to leave a comment or contact us directly. We look forward to continuing this conversation with you in our future posts!