A proposed shift in condominium risk
Washington, DC lawmakers are considering legislation that would significantly change how financial responsibility is assigned in condominium property damage claims.
B 26-0495, the Condominium Insurance Amendment Act of 2025, would:
- Increase the deductible pass-through cap from $5,000 to $25,000
- Require expanded unit owner insurance coverage
- Mandate a waiver of subrogation across policies
While framed as an address to rising insurance deductibles, the bill introduces massive new risks for condominium owners.
Determining fault: More complex than it appears
The legislation relies on identifying the “origin” of damage.
However, in many condominium buildings, particularly older ones, damage often involves:
- Shared systems
- Common elements
- Multiple contributing causes
This can make fault difficult to determine and frequently disputed.
Insurance coverage may not fully protect owners
Although the bill requires increased HO-6 insurance coverage, not all policies respond uniformly.
Limitations may include:
- Caps on loss assessment coverage
- Policy exclusions
- Claim disputes related to causation
As a result, owners could face significant out-of-pocket costs.
Waiver of subrogation: A critical change
The bill’s requirement for a waiver of subrogation represents a substantial shift.
This provision prevents insurers from pursuing recovery from responsible parties after a claim is paid.
In practical terms:
- If liability is incorrectly assigned, it may not be recoverable
- Associations and owners may be shielded from follow-up claims
- Financial responsibility may remain with the initially assigned party
A shift in financial structure
Taken together, these provisions:
- Increase individual owner exposure
- Reduce avenues for dispute resolution
- Shift financial risk away from associations
This represents a meaningful change in how condominium ownership operates in DC.
What to do
The bill is scheduled for a hearing on March 30.
Condominium owners, buyers, and real estate professionals should speak out now.
Sample Email
Send to:
Chair White- rwhite@dccouncil.gov
Councilmember Pinto- bpinto@dccouncil.gov
Councilmember Frumin- mfrumin@dccouncil.gov
Councilmember Nadeau- bnadeau@dccouncil.gov
Subject: Reject B 26-0495
Dear Councilmembers,
I am writing as a condominium homeowner in the District to urge you to OPPOSE B 26-0495, the Condominium Insurance Amendment Act of 2025, when it is heard on March 30th.
While the bill is presented as a fairness measure, it would in fact expose condominium owners to significant financial risk, legal uncertainty, and a loss of critical legal protections.
The bill increases the deductible pass-through cap from $5,000 to $25,000 based on where a loss is deemed to “originate.” In practice, however, determining the origin of damage, particularly in cases involving plumbing, building systems, or water intrusion, is often unclear and highly disputed. Losses frequently involve common elements or multiple contributing factors, yet this bill allows substantial financial responsibility to be assigned to an individual owner based on an inherently ambiguous standard.
I. The bill assumes that the “originating unit” of a loss can be clearly identified. In practice, this is often not the case. Water damage and other losses frequently involve common elements such as shared plumbing systems, roofs, and building infrastructure, where responsibility is unclear or disputed. Increasing the deductible pass-through cap to $25,000 will lead to frequent disputes and costly litigation, with individual owners unfairly bearing liability for losses they did not cause.
Of utmost concern is the bill’s requirement that all unit owner insurance policies include a waiver of subrogation with respect to the condominium association. This provision has profound consequences. It prevents insurers from pursuing recovery from the party actually responsible for a loss. As a result, even where damage is caused by association-controlled common elements, poor maintenance, or the actions of another party, the affected owner or their insurer may have no ability to recover those costs.
When combined with the increased deductible pass-through, this creates a system where:
- Liability can be assigned based on unclear or disputed causation
- Owners can be required to pay up to $25,000 or more
- Insurance coverage may be uncertain or insufficient
- There is no ability to correct an improper allocation of responsibility after the fact.
This structure removes accountability, discourages thorough investigation of claims, and shifts substantial financial and legal risk onto individual condominium owners.
II. The bill shifts financial responsibility away from condominium associations and onto individual owners. Condominium ownership is built on the principle of shared responsibility for shared systems. This legislation undermines that principle by allowing associations to transfer significant costs to individual owners, even when building-wide conditions or deferred maintenance contribute to, or originate, the loss.
III. The assumption that condominium unit owner (HO-6) insurance will adequately cover these increased costs is not accurate. Many HO-6 policies have limited loss assessment coverage, often well below $25,000, and typically exclude or limit coverage in cases where fault is unclear. As a result, owners could face substantial out-of-pocket expenses they reasonably believed were insured.
IV. Increasing the cap from $5,000 to $25,000 is a dramatic shift in financial exposure for condominium owners, many of whom purchased their homes under the existing framework. This change would disproportionately impact middle-income homeowners and those on fixed budgets.
For these reasons, I respectfully urge you to reject B 26-0495 and instead pursue solutions that address rising insurance costs without shifting disproportionate risk onto individual condominium owners.
Thank you for your consideration and for your commitment to protecting District residents.
Sincerely,
[Your Name, Ward #]
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