Because of a faulty thermostat, John and Nancy Buchler unknowingly constantly ran the heat in their condominium unit at a very high temperature. The continuous heat resulted in ‘cracks in the dry wall, damage to the ceilings and woodwork, and damage to the furniture and floors’, as well as damage to the unit’s other thermostat. The master deed includes within its definition of “Units” the following: “appliances …interior partitions, and other improvements located within or appurtenant to the UNIT on the interior side of all walls within the unit.’ It defines ‘common elements’ as ‘all land and all portions of the property not located within any UNIT’.
This condominium maintained insurance coverage ONLY to the extent required by New Jersey’s Condominium Act (the “Act”), its master deed and its bylaws. Since those documents mandate only coverage to include ‘all areas of the building not owned by UNIT OWNERS’, and the Act mandates only coverage for ‘all common elements and all structural portions of the condominium property,’ this condominium purchased a commercial property insurance policy covering only the condominium’s ‘common elements’. The policy’s endorsement further clarified the scope of the condominium’s coverage, ensuring that there was/is no coverage for any portion of the condominium that is ‘reserved for’ a unit ‘owner’s exclusive use or occupancy.’
As is far too often the case, the Buchlers did not have personal insurance covering their unit. The condominium refused to file a claim with its carrier with respect to the Buchlers’ interior damage. The Buchlers sued the condominium arguing that it was obligated to file an insurance claim. The court eventually dismissed the Buchlers’ complaint against the condominium. The court found that the condominium maintained insurance coverage to the extent it was/is required to maintain, and that said insurance provided coverage for only ‘common elements’ and those areas of the condominium not ‘reserved for’ an ‘owner’s exclusive use or occupancy’.
Since the Buchlers’ damage was limited to those things set forth above, the court found that there was/is no common element damage. The court found the condominium’s refusal to make an insurance claim proper.
The court’s decision in John Buchler, et al v. Club Regatta Condo Association, et al, provides support to those condominiums seeking to manage insurance-related costs by limiting the scope of its insurance coverage to only that which is expressly mandated by the Act and the particular condominium’s master deed and bylaws. It provides support as well to those condominium boards hoping to limit the nature, amount and scope of insurance claims that actually are filed by that condominium.
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