First published: May 2026

Is Your Building’s Insurance Really Protecting Owners?

TAKEAWAY This case is an important reminder that boards should not assume their governing documents or insurance policies automatically protect owners from lawsuits brought by the building’s insurer. If a board wants to limit subrogation claims against unit owners or shareholders, the waiver language in both the governing documents and the insurance policies must be clear, direct, and consistent. Vague phrases such as “if obtainable” or “may waive” may not provide the protection boards and residents think they do. Boards should periodically review their bylaws, proprietary leases, alteration agreements, and insurance policies with experienced legal and insurance professionals to confirm that coverage and waiver provisions reflect the building’s intentions. For a unit owner to suddenly learn that they can be sued by the building’s insurance company when there is damage can be a rather startling, and expensive, surprise.

ARGONAUT INSURANCE COMPANY/WINDOWS ON 123 LOFT CONDOMINIUM V. MICHAEL CIVIN, SEAN LILLIS, ET AL

WHAT HAPPENED A condominium owner hired a contractor to perform work inside his unit. At the end of one workday, the contractor allegedly left a balcony door open. This caused a pipe to freeze and burst, causing water damage to the building.

The condominium’s insurance company paid for the repairs and then filed a lawsuit against both the unit owner and the contractor to recover the money it paid out. This type of claim is called “subrogation,” which, in this case, means the insurance company sought reimbursement from the party it believes caused the damage.

The unit owner asked the court to dismiss the case, arguing that both the condominium’s bylaws and the insurance policy waived the insurer’s right to bring subrogation claims against unit owners.

IN COURT The court denied the owner’s request to dismiss the lawsuit.

The judge found that neither the insurance policy nor the condominium bylaws clearly and explicitly waived the insurer’s subrogation rights. The policy stated only that the insured “may waive” rights against another party in writing, which the court said was permissive language — not an actual waiver.

The condominium bylaws similarly stated that insurance policies should contain waivers of subrogation “to the extent obtainable at a cost deemed reasonable by the Board of Managers.” The court ruled that this language was conditional and not strong enough to create an enforceable waiver.

As a result, the insurance company’s lawsuit against the owner and contractor could proceed.

Justice Ona T. Wang