Water, Water Everywhere

The analysis turns on what the corporation insures and on the water-damage wording.

• Common elements and building structure ($180,000): squarely covered. The burst pipe is a sudden and accidental discharge, and the ensuing water damage is exactly what the exception to the water exclusion is designed to capture. The $10,000 deductible applies once to the occurrence.
• Owners' improvements and betterments ($50,000): coverage depends on whether the corporation assumed responsibility for them. Many condominium corporations insure improvements made by the corporation to common elements; if these improvements were installed by the corporation, they are likely covered. If they were installed by a unit owner, the corporation's policy may not respond, and the owner's own policy would.
• Unit owner's furniture ($30,000): generally not the corporation's loss. Personal property of a unit owner is insured under the owner's own condominium policy. Diane should not submit it under the corporation's policy, and the adjuster should direct the owner to file separately.
• Notice condition: the 72-hour notice requirement was breached (call on day five). The adjuster should assess whether the delay prejudiced the investigation; if not, the insurer may still pay, but Diane should be warned that late notice is a coverage risk.

Two mechanics need to be applied correctly.

• Deductible: the policy has a single $10,000 deductible per occurrence. Because all the damage flows from one burst pipe, the deductible is applied once to the total covered loss, not separately to each unit. The adjuster should confirm the policy does not contain a separate water-damage deductible, which would change the calculation.
• Bylaw/ordinance endorsement: this responds when rebuilding to current code costs more than like-for-like replacement - for example, upgraded sprinkler or electrical requirements triggered by the repair. The adjuster should obtain the current code requirements from the municipality and confirm the endorsement limit before committing. If the endorsement limit is, say, $500,000, the additional code costs are capped there.
• Order of calculation: establish the covered loss, apply the deductible, then add bylaw costs within the endorsement limit. The adjuster should document each component separately so the corporation can see how the settlement was built.

Subrogation lets the insurer step into the insured's shoes against the party legally responsible.

• Identify the cause: was the pipe failure due to a contractor's faulty work, a defective product, or a maintenance failure by a service provider? If a plumber installed the pipe improperly, or a manufacturer supplied a defective fitting, there may be a target.
• Preserve evidence: the adjuster should photograph and retain the failed pipe section, keep maintenance records, and avoid discarding damaged components until the investigation closes.
• Check waivers: the policy or a lease may contain a waiver of subrogation (common in commercial leases). If the corporation waived rights against the contractor, subrogation is lost.
• Timelines: note the limitation period in the relevant jurisdiction and notify the insurer's subrogation unit promptly so it can send a preservation letter.
• Contribution between insurers: if a unit owner's insurer pays for its own damage, the two insurers may sort out contribution; the adjuster should exchange information with the owner's insurer.