Who will indemnify for water damage caused by flooding neighbours without home insurance?

[Dagmar Gilden | 11.01]

Leaky pipes or an unattended tap left open in the bathroom in just one apartment in an apartment building will often result in damage to that apartment as well as the apartment downstairs. What should be done in this case and who will be required to indemnify for what?

Dagmar Gilden, product manager of Seesam's Home Insurance, says that water accidents are usually caused by leaky pipes. The second most common culprit is human error, i.e. people leaving the bathwater running while taking the dog out or popping out to the shop. There have also been cases where people turn on the tap while the building's water supply is cut off, only to forget about it and have the tap wreak havoc once the water supply is restored. 
"Last year, the largest water damage losses in an apartment resulted from an upstairs neighbour whose cold water hose burst. Water was able to flow for a long time before being detected. In this case, the losses amounted to 25,000 euros. Renovating two storeys in a private residence to eliminate water damage after a broken heating system turned out to be even costlier – the indemnity amounted to 30,000 euros. The average losses incurred due to leaky pipes are about 2,000 euros per apartment. The indemnity paid to downstairs neighbours is usually about 1,500 euros. However, there are also cases where the neighbours' water damage amounts to as much as 5,000-7,000 euros. Final losses depend on the duration of the water flow and the quality of finishing in the neighbour's apartment," says Gilden.

Apartment above to indemnify for losses
Regardless of whether you happen to be the cause of the flood or come home to find water running down your walls and puddles on the floor, the insurer recommends swift action. First, determine the source of the leak. Start by contacting your neighbours and if that fails, call the property management company, emergency accident services or a plumber to close the main water valve, stop the water flow and limit further damage.

"After that, take a few quick photos to document the situation. Try to get a head start with drying efforts to prevent further damage to the property and assets, take items to another room, use film to cover objects, etc. If you have home insurance, this is when you need to inform your insurer about what has happened, file a claim for compensation for damage and submit the photos taken," Gilden instructs.

If your downstairs neighbour floods your home and you have insurance coverage, contact your neighbour to restore any damage caused. You can also take photos and notify your insurer of the incident. The insurer will then provide instructions on how to proceed. If the upstairs neighbour, i.e. the person responsible for the water flood, is not covered by insurance but the person in the downstairs apartment is, the losses incurred by the downstairs neighbour will be indemnified by their insurer who may then demand reimbursement for the indemnified amount from the upstairs neighbour.
"If the person responsible for the flood has home insurance without liability insurance, their home insurance will not cover the losses caused to the downstairs neighbour and they will have to use their personal funds to pay indemnity to the neighbour," says Gilden.

In the event that both home owners have home insurance and the upstairs neighbour has also included liability insurance in their insurance contract, any damage caused to the interior finishing of the downstairs apartment due to a water leak upstairs will be compensated for by the insurance undertaking of the upstairs neighbour.

"Regardless of the existence of insurance cover, the owner of the upstairs apartment is liable for any losses incurred by other people due to damage which started in that upstairs apartment. Apartment owners whose property is damaged may therefore claim indemnity from the person causing the damage. Without insurance, the guilty party must pay such amounts from their own funds," says Gilden.

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Insurance is provided by Compensa Vienna Insurance Group, ADB Estonian Branch, which operates under the Seesam trademark in Estonia. Before concluding policies, please read the terms and conditions at www.seesam.ee and consult an expert if needed.
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