Insurance for condos and water damage

In a case likely to resonate across the Georgia Condo world, the Court of Appeals reversed a summary judgment for a condo owner, and found that Condo law does not require an association “to obtain insurance related to water damage or water perils.”


Mainor, the Plaintiff, sued his condominium association for breach of contract and attorney fees after his condo unit suffered damage as a result of water leaking from another unit. The damages alleged were in excess of $10,000. A subsequent leak caused an additional $4,480.60 of damage. While the association had insurance coverage for water damage, its insurer denied coverage.

The Plaintiff filed a motion for summary judgement — essentially, a decision on the facts as given, interpreting them in the Defendant’s favor. This motion was granted for the Plaintiff by the trial court because it interpreted the requirement in the Georgia Condo Act that an association carry “fire and extended coverage” as including water damage, and that therefore the association had breached its duty to the Plaintiff by maintaining coverage with (in the Court’s words) “an impermissibly high deductible.”

Condo Law and Associations

Condos are governed both by the State’s condominium laws, and by each individual association’s declaration. Here, the trial court decided that, according to O.C.G.A. § 44-3-94, “the deductible allocated per casualty loss could not exceed $5,000.” Further, “the trial court further held that, based on the terms of the declaration, the association could only assess Mainer up to $1,000 for the deductible for the water damage at issue.”

The question on appeal is: does Georgia condo law actually require an association to maintain coverage for water leaks?

Statute Reading

O.C.G.A. § 44-3-94 states, in part:

“Unless otherwise provided in the condominium instruments, in the event of damage to or destruction of any unit by a casualty covered under insurance required to be maintained by the association pursuant to Code Section 44-3-107, the association shall cause the unit to be restored.” (Emphasis added.)

O.C.G.A § 44-3-107 states, in part:

“(a) The association shall obtain: (1) A property insurance policy or policies affording fire and extended coverage insurance for and in an amount consonant with the full insurable replacement cost, less deductibles, of all buildings and structures within the condominium.”

Related to O.C.G.A § 44-3-107, a statute effective next year amending this section was passed by the Georgia Assembly on July 29, 2020, which confirmed that an association is not required to cover for water damage, and also created disclosure requirements regarding water damage coverage.

As it often does when interpreting the meaning of a law, the Court here stated “that the General Assembly meant what it said and said what it meant.” Deal v. Coleman, 294 Ga. 170, 172 (1)(a) (2013). This method of statutory interpretation intends to take the plain and ordinary meaning of the law, reading “the statutory text in its most natural and reasonable way, as an ordinary speaker of the English language would.” Id. at 172-173 (1) (a).

Thus, the Court here had to decide what the phrase “fire and extended coverage” means, since from this meaning it would understand what insurance coverage the association was required to carry.

The Association presented cases to support that this phrase “has a specific, well-established meaning in the insurance context that does not include coverage for water leaks.”

Plain meaning = industry meaning

Although it seems as if the Court goes beyond the plain meaning standard that it has just quoted, it opined that “ ‘extended coverage’ in the context of a fire insurance policy is a phrase connected with the insurance trade. […] There are also forms for what is called ‘extended coverage,’ dealing with windstorm, hail, aircraft, riot, vehicles, explosion, and smoke.” Thus, the Court sought interpretive help from the insurance industry, to find that “extended coverage” refers to a specific list of causes of damage separate from fire, and which “extends” fire coverage.

Although this list of causes is fairly standard, one does find some variation, which could lead one to believe that an “interpretation” of extended coverage could base itself not only on the set terms in this list, but upon a general sense of the kinds of causes in the list. But the Court didn’t pursue this interpretation, and supported its view of extended coverage by referring both to caselaw and the Georgia Office of Insurance and Fire Safety Commissioner.

Since “extended coverage” was not found to include water damage, the Court found that the association was under no obligation to carry insurance for water damage, and thus no breach of duty occurred here. The case was remanded back to the trial court.

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