The cost of fixing damage to our apartment exceeds what our insurance covers. What do we do?
We recently had a leak from one of the pipes in our co-op building. Our apartment, along with many others along the same pipe, was damaged, including our new hardwood floors. The cost to repair the floors exceeds what our insurance policy covers. What is our recourse to cover the difference?
If the leak was a result of negligence on the part of your co-op board, you may be able to recoup some of your losses, our experts say.
"Your best bet is to put in a liability claim against the building's master policy," says Jeffrey Schneider of Gotham Brokerage (a Brick sponsor). "However, absent negligence on the part of the building, you may not be able to recover expenses."
Find out if your board has submitted its own insurance claim for the water damage and whether you might be compensated.
"In addition to submitting a claim to her own insurance carrier, the shareholder should ask the board to submit a claim to its own carrier," says Elizabeth Donoghue, a partner with HMGDJ law (a Brick sponsor). "Perhaps the board has already done so, as several apartments in that line have been damaged by the leak. The shareholder should ask to be kept apprised of the status of the board’s claim and its repair of the pipe."
If the board knew there was an issue with the pipe, for instance, and failed to do anything about it, or refuses to file its own claim, you could potentially sue for reimbursement. But keep in mind that legal action could be a pricey endeavor, possibly more so than paying to repair the water damage yourself.
"If the board is nonresponsive, the shareholder might consider suing for reimbursement to cover the difference of repair or replacement of the floors and any other damages. Litigation is expensive; however, if the damages total $5,000 or less, she can sue on her own in small claims court," Donoghue says.
But if the leak wasn't due to any negligence on the board's part, you may be stuck with paying for whatever your policy—and the building's—doesn't cover, which is why it's important to update your insurance to cover any improvements you make to your home.
"The new floors installed in the apartment would be considered a betterment and it is unlikely that damage to them would be covered by the apartment corporation’s property insurance," says Jeffrey Reich, a partner in the law firm of Schwartz Sladkus Reich Greenberg Atlas. "Shareholders should be sure to maintain insurance coverage for their personal property and betterments for this very reason, and only some proprietary leases make doing so an affirmative shareholder obligation."
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