AZ condo owners could get stuck paying Association’s insurance deductible

By Deborah Goonan, Independent American Communities

Legislative alert for Arizona condo owners

According to a recent alert from Dennis Legere of Arizona Homeowners Coalition (AZHOC), state Legislators appear ready to pass a bill that would stick condo owners with the Association’s full insurance deductible.

Normally, the deductible for condominium association’s insurance policy is considered a common expense, divided among all unit owners. However, a vaguely worded amendment to HB 2251 could lead to misunderstandings and confusion about who pays the deductible, should a single unit be damaged due to an insured event.

Because of rising insurance premiums, many condo associations may attempt to pass on high Master Policy deductibles to condo owners — especially if an owner forces the HOA to file a claim.

For example, what if a leak in a common plumbing system results in damage to walls and personal property in an individual condo unit? This is a frequent occurrence, especially as condominiums age. The condo association might try to avoid filing an insurance claim and insist that the unit owner file a claim against their personal property insurance policy.

But, when the damage is a result of failure of common property, the unit owner will rightfully push the condo association to either file a Master Policy claim OR reimburse losses directly to the owner. HB 2251 started out as a bill to allow individual unit owners to file a claim against the Master Policy — as shareholders in the condominium association who pay their share for insurance premiums.

But HOA trade groups lobbied state Legislators to amend the bill, shifting financial burdens back to unit owners.

Legere’s specific concern with the current language of the bill is that, by filing a claim with the master policy, a single unit owner could get stuck paying the condo HOA’s entire deductible. That deductible can amount to tens, if not hundreds, of thousands of dollars. No unit owner will bear that burden. Instead, the property owner will avoid filing a claim and will have to pay the full cost of repairs to their unit, with no guarantee that the condo association will ever properly repair the common property (such as old plumbing) that caused the damage in the first place.

Read more about Arizona HB 2251 here and follow Legere’s instructions as to how to let state Legislators know that you want them to oppose HB 2251.

You can also view summaries of several other HOA-related bills on the move here.

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