What You Must Read:
Pursuant to the Maryland Condominium Act:
§11-114 REQUIRED INSURANCE COVERAGE; RECONSTRUCTION:
(g) Repair or reconstruction
(2) (iii) 1. If the cause of any damage to or destruction of any portion of the condominium originates from a unit, the owner of the unit where the cause of the damage or destruction originated is responsible for the council of unit owners' property insurance deductible not to exceed $5,000.
2. The council of unit owners shall inform each unit owner annually in writing of:
A. The unit owner's responsibility for the council of unit owners' property insurance deductible; and
B. The amount of the deductible- [In our case $5,000.00]
What the Above Means: (Elective Reading)
Pipes periodically break or leak, water heaters leak, grease fires start on the stove, toilets over flow-all causing thousands of dollars in damage. Who pays? The unit owner or the Association?
Our Condominium Association has insurance coverage called the "Master Policy." This is in addition to the policy every owner in this area should carry for their own unit, called an HO-6 policy or Loss Assessment Policy.
When damage occurs, and there is a covered loss, the Master Policy will kick in for the repair costs. But our insurance policy has a deductible - an amount that must be paid upfront or deducted from the insurance proceeds. This amount is $5,000.
Paying the deductible every time there is a problem is a problem; such expenditures are typically not plugged into the annual budget, and often at the end of the year an Association may have to significantly increase the monthly assessments to make up for any shortfall.
A few years ago, the Maryland Legislature gave every Association a significant break. It enacted what is called "strict liability." If the cause of any damage to the condominium started from within a unit, regardless of whether there was negligence, that owner must pay the deductible up to $5,000. And the law is not limited to plumbing problems; any incident that occurs in the unit that triggers payment by the Master Policy is covered under that law.
In Maryland, for the Association to legally collect the $5,000, the Board must - on an annual basis - inform all owners of the amount of the deductible and their obligation under the law should a problem occur within their unit.
Ocean Point, Ltd.