Water is the most common source of damage in condo buildings, and the most common source of arguments. A washing machine hose bursts on the fourth floor, and suddenly three units and a hallway need repairs. Who pays?
The answer depends on three things: what was damaged, where the water came from, and what your declaration and the association's insurance say. Section 12 of the Illinois Condominium Property Act (765 ILCS 605/12) sets the framework.
This guide explains that framework, walks through common scenarios, covers what owners and boards should do when a leak happens, and shares practical ways to prevent the next one.
Where condo leaks usually come from
Most water damage in condos traces back to a short list of sources:
Appliance supply lines — washing machine hoses, dishwasher and refrigerator ice-maker lines.
Water heaters that fail or leak at the end of their life.
Toilets and sinks — failed supply lines, overflows, wax ring failures.
Showers and tubs — failed grout, caulk or pans.
Common plumbing risers and drain stacks inside the walls.
Roofs, windows and exterior walls letting in rain or melting snow.
HVAC condensate lines and fan coil units.
Frozen pipes in exterior walls or unheated spaces.
Sewer backups into lower-level units or garages.
Knowing the source matters, because it drives both who is responsible for the repair and who may be charged the insurance deductible.
What the association's policy covers
The association must carry property insurance on the common elements and the units, including limited common elements and — unless the board determines otherwise — the bare walls, floors and ceilings of each unit. The policy must cover "special form" causes of loss and be written for at least the full replacement cost of the insured property, less deductibles.
The Act also clarifies what's part of the common elements: fixtures located within the unfinished interior surfaces of a unit's walls, floors and ceilings that were originally installed by the developer. Floor, wall and ceiling coverings — carpet, hardwood, tile, paint, wallpaper — are not common elements.
What the association's policy doesn't have to cover
The association's insurance need not cover "improvements and betterments" installed by owners. The Act defines these broadly: all decorating, fixtures and furnishings installed or added within the unit, including electrical fixtures, appliances, air conditioning and heating equipment, water heaters, owner-installed cabinets, and any other additions, alterations or upgrades an owner installed or bought.
If the association does choose to cover them, it can assess the added cost against the units that benefit.
In plain terms: the association's policy typically rebuilds the drywall shell. The owner's own policy covers what's inside it.
Why every owner needs an HO-6 policy
An HO-6 (condo unit owner's) policy fills the gap. It typically covers:
Flooring, cabinets, fixtures and finishes, especially upgrades.
Personal property.
Personal liability — including damage your unit causes to others.
Loss assessments, if the association passes a shared cost to owners.
The association's deductible, when it's charged back to you.
The board can go further. Under Section 12(h), the declaration, bylaws or a board rule may require owners to carry insurance covering their personal liability and compensatory damage to other units caused by their negligence — or originating from their unit regardless of negligence. That required coverage must include the damaged neighbor's deductible and their decorating, finishes, appliances and furnishings.
Choosing the right HO-6 limits
When you buy or renew an HO-6 policy, ask your agent about:
Dwelling or "improvements and betterments" coverage high enough to replace your finishes, cabinets, flooring and appliances at today's prices.
Loss assessment coverage at least as high as the association's current deductible. Many standard policies include only a small amount unless you ask for more.
Personal liability coverage sufficient to pay for damage your unit could cause to neighbors.
Water backup coverage, which is often a separate endorsement for sewer and drain backups.
Additional living expenses, in case you need to live elsewhere during repairs.
Ask your manager for the association's current deductible and give it to your agent. It changes more often than many owners realize.
Who pays the deductible?
When a claim is made on the association's policy, Section 12(c) gives the board three options:
1. Pay the deductible as a common expense, shared by all owners.
2. After notice and an opportunity for a hearing, charge the deductible to the owner who caused the damage, or from whose unit the damage originated.
3. Require the owners of the affected units to pay the deductible.
The second option doesn't require proof of negligence — the leak just has to have originated in that owner's unit. But it does require notice and a hearing before the charge is imposed. Skipping the hearing is a common and avoidable mistake.
With association deductibles now often $10,000, $25,000 or more, this decision has real financial consequences. The best practice is to adopt a written deductible policy in advance, so every owner knows the rule before a leak happens, and the board isn't making it up in the middle of a dispute.
What the hearing looks like
A deductible hearing doesn't have to be formal. The owner should receive written notice of the proposed charge, the reason for it (for example, the plumber's finding that the leak originated from the unit's water heater), and a date to be heard by the board. At the hearing, the owner can present their side — perhaps that the leak actually came from a common riser. The board then decides and notifies the owner in writing. (See Fining Owners in an Illinois Condo for more on running a fair hearing.)
When damage is below the deductible
Many leaks cause less damage than the association's deductible, so no claim is filed on the association's policy. In those cases, who pays for repairs depends largely on your declaration's maintenance and repair provisions, any written policy the board has adopted, and the owners' own insurance. The owner whose unit caused the damage may be responsible, and each owner's HO-6 policy may respond. Clear rules adopted in advance make these smaller losses much easier to resolve.
Maintenance responsibility is separate from insurance
Insurance determines who pays for damage. Your declaration determines who is responsible for maintaining and repairing each component — for example, whether the pipes serving only one unit are that owner's responsibility or the association's. Read both documents together.
Common scenarios
These examples show how the rules typically play out. The outcome in your building depends on your declaration, insurance policies and any deductible policy the board has adopted.
Scenario 1: The upstairs washing machine hose bursts. Water damages the unit below and a hallway. The leak originated in the upstairs unit. If the damage exceeds the deductible and a claim is filed, the board may — after notice and a hearing — charge the deductible to the upstairs owner, whose HO-6 policy may cover it. The downstairs owner's upgraded finishes and belongings are typically covered by their own HO-6.
Scenario 2: A common plumbing riser fails inside a wall. The riser is a common element. The association is responsible for repairing it. The board decides how to handle the deductible under Section 12(c) — often as a common expense, since the leak didn't originate from any owner's unit component.
Scenario 3: Rain comes in through a roof or exterior wall. The roof and exterior are common elements, so the association handles the repair. Interior finishes and personal property are usually the owner's HO-6 responsibility.
Scenario 4: A water heater fails at the end of its life. Water heaters are typically owner responsibility and are listed in the Act as improvements and betterments. Damage to other units may lead to a deductible charge-back to the owner, after notice and a hearing.
Scenario 5: A toilet overflows because of a clog. The source is the owner's unit, so the analysis is similar to Scenario 1.
What to do when a leak happens
Owners:
1. Stop the water if you can, and notify management immediately — use the emergency line for active leaks.
2. Photograph everything.
3. Notify your HO-6 insurer.
4. Move belongings out of harm's way and start drying if it's safe.
5. Don't start permanent repairs until the source is identified and the adjusters have seen the damage.
6. Keep receipts for any emergency expenses.
Boards and managers:
1. Send a plumber to find and stop the source — that's the key fact for deciding the deductible.
2. Start mitigation (water extraction, drying) quickly to prevent mold.
3. Document the source, affected units and common areas, with photos and the plumber's written findings.
4. Decide whether to file a claim on the association's policy.
5. Apply your deductible policy, including notice and a hearing if charging an owner.
6. Communicate with all affected owners about next steps and timing.
Don't ignore mold
Water that sits for more than a day or two can lead to mold growth inside walls and under flooring. Prompt drying, often with professional dehumidifiers and moisture readings, protects both health and the insurance claim. If mold is found, a qualified remediation contractor should handle it.
Accessing units during a leak
Stopping a leak sometimes means entering a unit where the owner isn't home. Most declarations give the association a right of access to units for repairs and emergencies. Know what your declaration says, keep emergency contacts current, and document any emergency entry, including who entered, when and why.
Preventing the next one
Encourage or require braided steel washer hoses and leak detectors near water heaters.
Set a replacement schedule for owner water heaters (commonly 10–12 years).
Keep shut-off valves accessible and labeled, and tell owners where theirs are.
Inspect common plumbing risers as part of your reserve study.
Remind owners before winter to keep heat on in units and avoid blocking heat to exterior walls.
Consider automatic water shut-off devices, which can stop a leak before it spreads.
Inspect roofs, gutters and window sealants regularly, especially after major storms.
Remind owners who travel to shut off their unit's water or have someone check on the unit.
Frequently asked questions
My upstairs neighbor's leak damaged my unit. Who pays?
It depends on the source, the damage amount, your declaration and the association's deductible policy. Your own HO-6 policy is often the first place to turn for your finishes and belongings.
Can the association charge me the deductible if I didn't do anything wrong?
Yes, if the damage originated from your unit — Section 12(c) doesn't require negligence — but only after notice and an opportunity for a hearing.
Does the association's policy cover my hardwood floors?
Typically not. Floor coverings aren't common elements, and owner upgrades are usually improvements and betterments covered by your HO-6.
How much loss assessment coverage do I need?
At least enough to cover the association's current deductible. Ask your manager for the number and share it with your agent.
The bottom line
In most Illinois condos, the association insures the structure and the owner insures what's inside it. Who pays the deductible is the board's call within the limits of Section 12 — so make that call once, in writing, before the next leak. Owners who carry the right HO-6 coverage and know where their shut-off valve is are protected when it happens.
Related reading:
Condo Emergencies in Illinois: What Counts, What the Board Can Do Without a Vote, and Who Must Be Told
Rising Condo Insurance Costs in Illinois: What the Law Requires and What Boards Can Control
Fining Owners in an Illinois Condo: Notice, Hearings and Fair Enforcement
How Much Should an Illinois Condo Association Keep in Reserves?
Pimmit Run Management helps Illinois condo boards adopt clear deductible and insurance policies, and manages leak response from first call to final repair. Contact us to learn more.
This article is general information, not legal or insurance advice. Coverage depends on your declaration and policies; consult your association's attorney and insurance professional.
This article is general information, not legal advice. Consult your association's attorney about your specific situation.