Last December, Nicky Enriquez began noticing beads of moisture on the ceiling and walls of her condo in Chelsea, which she suspected was somehow connected to the new floor recently installed upstairs by a contractor.
Her upstairs neighbor brushed off her concerns, but a couple of months later, water came pouring in so fast that she and her boyfriend had to use a dozen pots and pans to catch it.
It was heartbreaking for Enriquez, 36, who works in higher education, who had purchased her condo in pristine condition in an aging 16-unit building only about a year earlier. But at least she had insurance to pay for repairs.
Six months later, however, she and her now-husband are still living under an unsightly tarp covering the big chunk of the living room ceiling that had to be torn down. There’s water damage throughout the condo.
What’s causing the delay? Well, there are actually three insurance companies involved, and maybe a fourth yet to be drawn into what has become, for Enriquez, a disheartening wrangle.
An agent for Enriquez, responding to the constant delays, told her in May that “these types of claims are always tricky” because so many insurers are involved.
Let’s use this unhappy experience to better understand how it all works:
Q. Why didn’t Enriquez’s homeowners insurer simply pay for the repairs?
A. Travelers, Enriquez’s insurer, did pay several thousands of dollars, but not the full cost of repairs to her ceiling, walls, and floor, which could be as high as $20,000. All standard insurance policies begin with a declarations page, which summarizes a half-dozen types of coverage and the dollar amounts of coverage. “Coverage A” in the standard form covers your “dwelling,” and may be the most important. Travelers paid $2,000 to Enriquez under Coverage A, even though her policy gave her about $100,000 in coverage.
Q. Why did Travelers limit its payment to $2,000?
A. When you own a condo, you are actually covered under two policies: your own and the building’s, typically called a “master” policy. You and the other owners in your building pay for the master policy through condo association fees. The master policy is considered the primary insurer of the building.
Q. If the master policy covers the building, why did Travelers pay $2,000?
A. Insurers of individual units in condo buildings typically will pay up to the deductible amount on the master policy. The two policies are complementary, not overlapping. In Enriquez’s case, the deductible on the master policy was $2,500. So Travelers, as the secondary insurer, paid that amount, minus its own deductible of $500.
If you own a condo, you should know the deductible amount on your building’s master policy and whether your personal policy will cover up to that amount. Any gap between the two policies leaves you exposed. At $2,500, the deductible in Enriquez’s case is low. The trend in recent years is for condo associations to jack up master policy deductibles to $10,000 or more to save on premiums.
Q. Did Enriquez’s Travelers policy pay for anything else?
A. Yes. “Coverage D” on the standard declarations page is for “loss of use,” which allowed Enriquez to recover the cost of a hotel and some food when she and her partner had to temporarily move out. Had furniture or other personal property been damaged, Enriquez could have made a claim with Travelers under “Coverage C, personal property.”
Q. What happened when Enriquez submitted her claim to the building’s master insurer?
A. Let’s step back a moment and consider that most types of insurance have two distinct components. The first covers you for damage to your property (Coverage A, C, D, as mentioned above, and B for “other structures,” if any). It’s a contract between you and your insurer that says you will be paid for damages, no matter who is at fault or if nobody is at fault, with some exceptions.
The other component is for liability (Coverage E for “personal liability” and F for “medical payments”). It covers you when you are at fault. Let’s say you neglect to maintain your condo in good repair and a guest takes a fall and suffers an injury. You are personally liable to your guest for damages including medical bills. But your homeowners insurer covers you for those damages. (Auto insurance is similar in having distinct property and liability components.)
Q. Why is liability coverage relevant to Enriquez?
A. Because the building’s master insurer, Penn-America, treated her claim for property damages as a liability claim, as if Enriquez were making a claim against the condo association for somehow being at fault.
And it took Penn-America almost six months to finally issue a letter denying her claim. “We have completed our investigation … and find our insured (the condo association) has no liability,” the letter said.
Six months is way too long to wait for insurance to fix your home. I reviewed scores of e-mails between Enriquez and various insurers and agents. For months, Penn-America focused on trying to reach the upstairs neighbor, his insurer, and his contractor, repeatedly replying to Enriquez’s request for updates by saying it was still investigating.
When the denial finally came, it prompted Enriquez to go back to Travelers to see if it had any advice. That’s when Travelers, after reading Penn-America’s letter, told Enriquez it “seems to be a liability denial” but “should have been” a damages claim.
Q. Is it relevant to Enriquez what actually caused the damage to her condo?
A. No, not really. But for Penn-America it’s relevant. It may have a good claim against the upstairs neighbor or his flooring contractor (or his contractor’s insurer), depending on what happened. (A water pipe above Enriquez’s ceiling had small holes punctured in it.)
Q. Where do things stand now?
A. Penn-America reopened Enriquez’s claim.
As of last week, the tarp was still hanging in her living room.