The Threat Lurking in Apartment Buildings: Residents' DIY Renovations Are Damaging Homes
On average, 17 damage claims are registered monthly in apartment buildings because residents have, on their own initiative and without coordination with the homeowners' association, built fireplaces, removed load-bearing walls, and rebuilt pipe systems, causing damage to the entire residential building – according to data from ERGO insurance.
Although home insurance has become widespread and today nearly 70 percent of Estonian residential buildings and apartments are insured, there is still far too little insurance coverage for common property, or the building envelope. Of the approximately 25,000 Estonian homeowners' associations, only half have insured themselves to date. At the same time, the number of property insurance claims for homeowners' associations grows every year.
ERGO, one of Estonia's largest insurance companies, registers an average of 17 homeowners' association property insurance claims per month, with an average claim amount reaching 2,250 euros. Compared to last year, however, claims are becoming more serious and claim amounts have grown dramatically, as in the previous year they averaged 1,370 euros.
One of the biggest risks in apartment buildings is so-called resident self-improvement during apartment renovations, which damages the entire building. "For example, I recall a situation where an apartment owner installed a wood-burning fireplace in his apartment and connected it to the ventilation system, essentially burning down half the building, since ventilation shafts are not designed to conduct hot gases," said Erko Makienko, head of the commercial client claims department at ERGO. In this case, the lion's share of the apartment building's roof was destroyed and the entire building suffered damage due to fire suppression water. Therefore, many residents were unable to live in their apartments for quite a long time. The damages reached hundreds of thousands of euros.
Similarly, there are frequent cases where residents remove load-bearing walls from apartments and carelessly repair technical systems without coordinating with the association, thereby causing damage to the entire building. "For example, an apartment building resident might think that replacing a radiator or pipe is a simple task. However, all parts of the system must fit together properly. Additionally, all changes to building structures must be studied beforehand, since buildings are wholes and one must not remove or add anything on their own authority," Makienko explained. He recalls a case where an apartment owner built an impressive stove in a multi-story building, but failed to account for the fact that the building's wooden load-bearing structure could not withstand the weight of the stove and began to sag under the excessive load. Fortunately, major damage was prevented. In the worst-case scenario, the apartment building could have collapsed or the use of the stove could have resulted in exhaust gases entering living spaces, since sagging creates cracks in heating structures.
It is important to emphasize here that home insurance does not help in such incidents, as it does not extend to the building envelope. To eliminate damages affecting the entire building, associations need to take out separate property insurance. The building envelope can be insured by the association as a legal entity, which owns all jointly owned parts of the building from water pipes to the roof.
In addition to problems caused by residents, damage claims for homeowners' associations are more often related to pipe system leaks and lightning damage, for example, lightning can damage the electronic systems of elevators or electronic locks. There are also situations where vandals have soiled apartment building walls or broken doors. "From water damage incidents, I recall a burst riser pipe that flooded three lower floors and caused approximately 27,000 euros in damage, an overturned sewage pipe created 20,300 euros in damages," Makienko provided examples. However, there have also been cases where a pipe leak has damaged ten or more apartments and the damage amounts have reached hundreds of thousands of euros.
Homeowners' association property insurance includes coverage against fire damage, pipe leaks or ruptures, storms, flooding, vandalism, theft, glass breakage, and electrical failures. In addition to property insurance, a homeowners' association can also conclude liability insurance, which is helpful in situations where, for example, a facade panel torn from the side of a building by a storm falls onto a sidewalk and damages cars parked nearby or, worse yet, people.
