When there is a loss from one unit to another, one area that will be investigated is the potential for subrogation. Subrogation is the right of the insurance carrier to attempt to recover any amounts paid on a claim from a party that may be responsible for the loss. Most buildings have what is known as a waiver of subrogation within the bylaws or proprietary lease, which prevents the insurance carriers of an owner or the building to recoup, from each other, the amount paid after damages. This may sound very complicated but this is an example of how it works.
If you have a pipe burst in your unit and it damages building property, the waiver of subrogation will protect you from the building seeking to have your carrier pay, and vice versa. However, this does not apply between the units themselves and may be impacted where gross negligence is concerned. When there is a waiver of subrogation, it means that everybody is responsible for replacing their own damage; their own property that’s damaged. It’s meant to safeguard everybody from going back and forth to recoup amounts spent. Be sure to ask your broker if you have additional questions.