Meet the Mishaps: Liability Larry and Catastrophe Cathy are married with two kids, Deductible Dudley and Peril Polly, and a dog, Risk. As their name would imply, they are often faced with very unfortunate circumstances. What’s worse, everyone around them seems to get caught up in their bad luck, too!
Join us each month as we dive into some of the adversity that comes their way, all from the insurance perspective!
The Story
When we last saw the Mishaps, young Peril Polly Mishap had recently traveled to Italy with best friend Mary Mooney and Mary’s family. While there, Mr. Mooney lost control of the rental car, attempting to maneuver around a herd of goats in the road, and eventually crashing into a vineyard.
Upon returning home, the Mooneys were thrilled to find out they had adequate coverage to deal with the incident in Tuscany. What they were less than thrilled about was that the hot water heater in their penthouse apartment sprung a leak and sent water everywhere.
The Loss
While the Mooneys were away, their downstairs neighbor noticed water dripping through the ceiling in their apartment. The building management, aware the Mooneys were away, entered the apartment to discover the hot water heater had leaked. The manager shut off the water to the Mooney’s apartment to stem the flow, but the damage was already done.
The water had sprayed from the leak to damage the interior of the closet in which the unit was housed. Water had seeped out of the closet and soaked the hardwood flooring in the area. The floor had become so saturated that water began dripping through the ceiling of the apartment below. That apartment was configured a bit differently and the leak was in the neighbor’s home office. A desk, computer equipment and other personal items required replacement. The ceiling and original vintage flooring in that room would need restoration.
The Investigation
The Mooneys believed that the building’s insurance would cover the charges associated with this loss since the water heater was in the unit before they purchased it. They were dismayed to find that the building not only would not cover the damage to the Mooney’s apartment, it also would not cover damage to the unit below.
The Outcome
When Mrs. Mooney called their insurance agent, Annabelle, to discuss the car accident, she also spoke to her about the water heater. At the time the Mooneys purchased their penthouse, Annabelle had reviewed the bylaws of the co-op building. These bylaws indicated that the building is responsible for only the structure itself – not anything beyond the studs. This meant that the Mooneys were responsible for having appropriate coverage for the floors in their own unit. The policy they purchased indicated this and therefore this loss was covered under their policy.
Also, understanding that the units within this building were luxury residences, Annabelle ensured that the Mooneys had high liability limits. A standard policy with lower limits may not have a high enough limit to cover the expensive equipment, furnishings, and flooring inside the neighbor’s unit.
Aside from their deductible, the only out of pocket expense the Mooneys incurred was for a new water heater. Unfortunately, most homeowners policies do not cover mechanical breakdown or wear and tear of household appliances and equipment. However, the damage caused by a malfunctioning piece of equipment is a covered loss.
The Lesson
Multiple-residence buildings such as condominiums and co-ops often have bylaws that dictate the type of insurance coverage an owner needs. Failure to purchase the correct coverage can have disastrous effects. The Mooneys were lucky that they found a knowledgeable agent who asked for a copy of the bylaw so she’d be able to best advise her clients.
It’s important to read your bylaws and have a knowledgeable agent.
Claims Chronicles of the Mishaps is a fictional series based on actual claims. The Mishaps are an imaginary family and any resemblance to any person is purely coincidental. Claim details and circumstances have been changed to protect the privacy of individuals. All insurance policies are different and each separate policy will dictate the coverage in each unique scenario. Nothing in this post is meant to suggest a guarantee of coverage.