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A plumbing line backed up and flooded my condo apartment. My homeowner’s insurance has denied coverage—can I challenge this?
“Yes, you can challenge a denial of coverage for this type of water damage,” says Ian Brandt, partner at the real estate law firm Wagner Berkow & Brandt. He points out that when there’s a clog in the common building plumbing outside your apartment and wastewater backs up—due to grease, baby wipes, sanitary products that get stuck, or anything else—homeowners’ insurers routinely deny coverage and leave apartment owners stuck with the bill for clean up and repair costs.
However, Brandt adds, “I have successfully challenged this type of coverage declination." He says, anyone whose apartment, whether in a co-op or a condo, has suffered damage due to water backups should absolutely challenge the denial of coverage.
“For decades, homeowners’ insurers have been getting away with declining coverage for backups that damage apartments. They have made considerable money doing this, but to the detriment of co-op shareholders and condo unit owners who hold the valuable insurance policies that are supposed to cover these losses,” Brandt says.
With the right representation, you would likely have a strong breach of contract claim against your insurance company, he says.
Brandt points out that standard form HOA-6 homeowners' policies, which are routinely issued to both residential condo unit owners and co-op shareholders alike, contain an exclusion that most likely was originally designed to avoid coverage for discharges and backups that originate from municipal sewer systems consequently backing up into single-family homes.
Homeowners’ insurers have then applied this exact exclusion to discharges originating inside co-op and condo buildings. “It means if there’s a grease clog two floors down from your apartment and the pipes discharge sewage or wastewater into the apartment, they claim that there is no coverage for this,” Brandt says.
This is highly problematic and a misuse of the sewer exclusion in the policy, he says. It leaves insurance companies exposed to coverage claims from apartment owners.
Brandt points out the measure of homeowner’s damages (the insured losses from the flooding) is the cost of repairing or replacing any water damaged walls, floors, ceilings, electrical equipment, improvements, and contents in the apartment. It also includes the additional living expenses, if you are forced to leave the apartment, which results in temporary lodging and additional food and daily living costs, including hotel accommodations.
“This can amount to tens or hundreds of thousands of dollars in increased costs, while you wait to have your apartment restored to a habitable condition,” Brandt says. He recently settled a wastewater back up in court for $170,000 in an apartment owner’s losses.
“For years, insurance companies have been denying thousands and thousands of these claims. If you’ve had one of these, losses you should definitely consult with an attorney,” Brandt says.
Ian Brandt is a partner at the New York City real estate firm Wagner, Berkow & Brandt. To submit a question for this column, click here. To arrange a free, 15-minute telephone consultation, send Ian an email, or call 646-780-7272.