The DC Condo Act change that shifts risk to unit owners and removes their ability to recover losses is Bill 26-0495, the Condominium Insurance Amendment Act of 2025. This proposed D.C. Council legislation updates condo insurance rules in favor of associations by raising the maximum unit owner deductible pass-through from $5,000 to $25,000, forcing waivers of subrogation so unit owners can’t sue, and setting higher minimum HO-6 insurance coverage requirements for individual owners.
What It Does
At a time when many condominium unit owners are losing market value on their homes and simultaneously facing rising association dues, potential special assessments, and spiking utility and insurance costs, the D.C. Council has decided to take up an industry-backed bill to further increase owners’ financial burden.
B 26-0495 is being framed as a “fairness measure” but it’s anything but fair to unit owners. If you don’t look closely, the bill’s logic seems simple: If damage starts in one unit, that owner should bear a greater cost.
The bill proposes:
- Drastically increasing the deductible pass-through cap from $5,000 to $25,000
- Requiring owners to carry expanded insurance coverage
- Mandating a waiver of subrogation across all policies
But in reality, the risks for unit owners come into sharp focus.
Origin Of Loss
The bill relies on identifying a single source for the cause of damages. As anyone who lives in a condominium knows, condominium damage rarely has a clean starting point. It’s notoriously difficult to determine a single cause, especially when plumbing is involved. Water leaks may involve:
- Shared plumbing stacks
- Behind-the-wall infrastructure
- Deferred maintenance
- Multiple contributing failures
“Origin” is often disputed, and sometimes unknowable. Yet under this bill, that determination becomes the basis for assigning up to $25,000 in liability to a single unit owner.
Insurers and the HO6 policy
Most unit owners turn to their insurers when damage arises. The bill assumes HO-6 policies will cover this exposure. Not so. Many insurers:
- Cap loss assessment coverage
- Exclude certain types of claims
- Limit coverage when fault is unclear
- Increase premiums or refuse to cover when a subrogation clause exists
The bill also takes away the insurer’s right to sue with a forced waiver of subrogation provision. Often the only resort in condominium disputes, the right to sue for partial damages. or full damages that have been unfairly levied, is eliminated because the bill mandates that all unit owner-obtained insurance policies include a Waiver of Subrogation.
What Is Waiver Of Subrogation?
Subrogation permits an insurance company to ‘stand in the place of its insured’ and seek recovery from the third-party that caused the damage. The insurance company that issued an H06 Policy covering a unit damaged due to a neighboring unit owner’s negligence, or the deferred maintenance or a system failure attributable to the association, could seek to recover the sum paid out to its insured through a subrogation action against the negligent party. Associations, especially those who have deferred maintenance and repairs, want to avoid that liability.
When Waiver of Subrogation Comes Into Play
With a waiver of subrogation, the insurance company knowingly relinquishes any rights that it may have to seek that third-party reimbursement, even if that party is responsible for the damage or loss.
Real World Consequences
Many condominium owner policies (HO-6) have loss assessment coverage caps well below $25,000 and may exclude certain claims or limit coverage when fault is unclear. That means the unit owner is on the hook for the damage themselves.
- The Waiver of Subrogation protects at-fault parties like condo associations from being sued
- It considers unit owners insured persons for liability involving common areas and ensures that the insurer cannot seek recovery from the association itself, which can result in the unit owner being denied coverage or payment for a claim
- A waiver of subrogation means the insurer is barred from suing a negligent neighbor or association responsible for common areas and systems in order to recoup costs they have paid to their insured. So, they often increase premiums when waivers of subrogation are put in place, or refuse to add a formal endorsement to the policy, and limit coverage as a result.
So if cause is assigned unfairly to one party and the insurer refuses to pay the claim, or limits the claim, there is no recourse for the blamed unit owner, even when the cause involves multiple sources and common areas.
Misleading Headline For Industry-Backed Bill
Citizenportal.com, an Ai driven local government site, released a one-sided report on the March’s Committee On Housing public meeting for the bill, with the misleading headline: “Condo owners back higher unit insurance minimums and larger deductible pass‑through cap.”
“Multiple condominium board members and industry representatives testified in favor of raising the maximum deductible pass‑through from $5,000 to $25,000 and clarifying required HO‑6 coverages to control association premiums and encourage unit‑owner responsibility.
Condominium association leaders told the Committee on Housing they support changes in the Condominium Insurance Amendment Act (B26‑495) to reflect much higher master policy deductibles in today’s insurance market. Jane Rogers, counsel for community associations, said the $5,000 pass‑through cap in current law is outdated, and that increasing the cap aligns statute with current insurance practices.”
Note that all of the cited persons work for associations or are industry representatives. They favor the bill because it shifts financial responsibility away from associations onto individual unit owners. If individual owners were educated on what the bill would mean for them, very few would support it.
Why Is This Especially Important In DC?
Because Washington DC’s condo market includes:
- A substantial number of older buildings with aging plumbing, electrical and mechanicals
- Complex infrastructure that often isn’t clear to unit owners
- Inherited infrastructures (conversions) that haven’t been mapped or assessed for integrity
- Mixed-income ownership
This bill increases financial exposure in exactly the types of buildings where:
- Problems are hardest to trace
- And most expensive to resolve
The Onerous Hike In Pass-Through Deductible
The dramatic increase in the deductible pass-through cap from $5,000 to $25,000 in the Condominium Insurance Amendment Act of 2025 carries several significant risks and harms for unit owners.
The deductible pass-through cap sets the maximum amount a condo association can charge an individual unit owner for damage that originates in that owner’s unit.
Raising this cap fivefold means unit owners would suddenly face huge out-of-pocket expenses when damage occurs, even for incidents that might be minor or borderline in responsibility.
For many condo owners, especially those on fixed incomes, affordable unit or IZ unit owners, or owners on tight budgets, this could create substantial financial strain.
Why its unfair
Despite damage in condominiums rarely having a clear, single point of origin, the bill’s framework assumes the “originating unit” can be identified and held fully accountable for losses up to $25,000. Assigning a large financial burden to one owner based on ambiguous or contested evidence risks unfairly penalizing individuals for damage they did not solely cause–or cause at all.
Unit owners’ HO-6 insurance policies often have limited loss assessment coverage. When the policy cap is below $25,000, and some exclude or restrict claims where fault is uncertain, unit owners will be left footing bills that far exceed their insurance coverage, leading to unexpected and potentially devastating personal expense. With the inability to pay comes the probability of fines, legal action, and the potential loss of the home.
How Associations Benefit
The increase in the deductible cap could incentivize condo associations to pass through more costs to unit owners rather than addressing maintenance or common element issues proactively.
Because the bill shields associations from subrogation claims thanks to the waiver requirement, associations would bear less financial responsibility for deferred maintenance or systemic problems, pushing costs onto individual owners instead.
In combination with Fannie Mae and Freddie Mac’s new underwriting guidelines requiring 15% reserves, this could be devastating for unit owners in some condominiums. Many associations facing non-warrantability in January will be eager to offset costs of deferred maintenance, latent defects no longer covered by bonds, and systemic problems by shifting them to unit owners. Condominium owners may well find themselves the targets for the costs to remedy these issues.
Unit owner recourse is severely limited and costly.
Even with the Waiver of Subrogation provision in the D.C. Condominium Insurance Amendment Act of 2025, there are still very limited–but not entirely eliminated–circumstances where a unit owner might have legal recourse against the condominium association.
Direct Claims for Non-Insurance Issues
The waiver of subrogation only blocks lawsuits related to insurance recoveries (where the insurer would “step into the shoes” of the unit owner to recover amounts paid out under a policy). It does not prevent all lawsuits by unit owners against the association.
If a unit owner chooses not to file an insurance claim and instead tries to recover their loss by suing the condominium association directly, they bypass the subrogation waiver, which applies only to insurance claims. It doesn’t directly bar unit owners themselves from bringing a lawsuit if they’ve never made an insurance claim for the issue.
Direct legal action remains possible if the unit owner is able to pay out-of-pocket for damages. They may sue the association directly for the loss, especially if they can prove the association was negligent, violated governing documents, or failed to maintain common elements. This is most likely to succeed if the association’s negligence is clear and the loss is not one that’s customarily resolved through insurance.
Some of the barriers to success are written into condominium bylaws and CC&Rs:
- Most condo documents require owners to carry insurance, and may require claims to go through insurance first. If a unit owner bypasses insurance, the governing documents might restrict or even prohibit a direct lawsuit.
- Mediation or arbitration clauses could also apply, potentially requiring alternative dispute resolution before a lawsuit can proceed.
Courts may scrutinize whether the owner is trying to “end-run” the insurance process or if the loss should have been covered by insurance.
If the loss is not covered by any insurance (either because of policy exclusions, deductibles, or simply because the owner is underinsured or uninsured), the owner’s right to sue the association for negligence or breach of duty may not automatically be blocked by the waiver of subrogation, if the unit owner is able to finance legal action and prove the claims.
If the issue is unrelated to an insurance claim, such as breach of fiduciary duty, breach of contract, or violations of the condominium bylaws or statutes, a unit owner may still have a right to bring a direct claim. For instance, if the association fails to maintain common elements as required and this results in damage, the owner could potentially sue for breach of duty if the loss is not covered by insurance or if there are other damages not paid by insurance.
If the association acts in bad faith, is grossly negligent, or violates statutory obligations, courts might allow a direct action, especially if there’s egregious misconduct or clear statutory violation.
Other claims for uninsured losses
If a unit owner suffers harm that is not related to property damage or an insurance event (for example, personal injury, discrimination, or violation of privacy), the waiver of subrogation should not shield the association from those types of claims.
Keep in mind that condominium bylaws or governing documents may impose additional barriers to lawsuits, such as mandatory mediation or arbitration, or may limit the types of damages that can be recovered. But these are separate from the subrogation waiver itself.
In these circumstances, the cap increase may actually lead to more frequent and costly litigation. Attorneys often quote costs of $10,000 or more to represent a unit owner in litigation against an association.
When responsibility for damage is unclear, owners facing large deductible charges may challenge the association or other owners, generating high legal fees and community conflict. This undermines the cooperative spirit essential to condominium living and may further burden all owners financially.
A Shift From The Status Quo
The jump to a $25,000 cap represents a dramatic shift from the status quo, imposing new financial risks on owners who purchased their units under a different framework. This retrospective increase in potential liability could be seen as unfair, destabilizing owners’ financial planning and housing security.
In sum, the bill’s increase in the deductible pass-through cap threatens to expose unit owners to significantly greater financial risk, especially in the common scenarios of complex, shared, or disputed damage. It amplifies the likelihood of uninsured costs, legal disputes, and inequitable cost allocation, harms that disproportionately impact typical condo owners rather than large associations or property managers.
Summary
B 26-0495, the Condominium Insurance Amendment Act of 2025 is a bill influenced by powerful interests for property management companies and associations. The bill harms individual condo owners.
- Dramatically increases owner liability
- Protects associations even when they’re at fault
- Expands liability
- Severely reduces legal protections
- Introduces uninsured risk
The bill’s increase of the deductible pass-through cap, mandatory waiver of subrogation, and assumptions about HO-6 coverage create increased financial exposure and legal uncertainty for unit owners, while limiting insurers’ and owners’ ability to recover damages from responsible parties, including condo associations.
This legislation, while framed as fairness or risk management, shifts substantial risk and potential cost to individual condo owners, especially in buildings where damage origins are hard to attribute. The concerns about increased premiums, reduced legal recourse, and disproportionate impact on owners in older or complex condominiums are real.
Take Action
Write the councilmembers sitting on the Housing Committee today and make your voice heard.
Sample Email
Send to:
– Chair White- rwhite@dccouncil.gov
– Councilmember Pinto- bpinto@dccouncil.gov
– Councilmember Frumin- mfrumin@dccouncil.gov
– Councilmember Nadeau- bnadeau@dccouncil.gov
– Councilmember Bonds – abonds@dccouncil.gov
Dear Councilmembers,
I am writing as a condominium homeowner in the District to urge you to OPPOSE B 26-0495, the Condominium Insurance Amendment Act of 2025, when it is heard on March 30th.
While the bill is presented as a fairness measure, it would in fact expose condominium owners to significant financial risk, legal uncertainty, and a loss of critical legal protections.
The bill increases the deductible pass-through cap from $5,000 to $25,000 based on where a loss is deemed to “originate.” In practice, however, determining the origin of damage, particularly in cases involving plumbing, building systems, or water intrusion, is often unclear and highly disputed. Losses frequently involve common elements or multiple contributing factors, yet this bill allows substantial financial responsibility to be assigned to an individual owner based on an inherently ambiguous standard.
I. The bill assumes that the “originating unit” of a loss can be clearly identified. In practice, this is often not the case. Water damage and other losses frequently involve common elements such as shared plumbing systems, roofs, and building infrastructure, where responsibility is unclear or disputed. Increasing the deductible pass-through cap to $25,000 will lead to frequent disputes and costly litigation, with individual owners unfairly bearing liability for losses they did not cause.
Of utmost concern is the bill’s requirement that all unit owner insurance policies include a waiver of subrogation with respect to the condominium association. This provision has profound consequences. It prevents insurers from pursuing recovery from the party actually responsible for a loss. As a result, even where damage is caused by association-controlled common elements, poor maintenance, or the actions of another party, the affected owner or their insurer may have no ability to recover those costs.
When combined with the increased deductible pass-through, this creates a system where:
- Liability can be assigned based on unclear or disputed causation
- Owners can be required to pay up to $25,000 or more
- Insurance coverage may be uncertain or insufficient
- There is no ability to correct an improper allocation of responsibility after the fact.
This structure removes accountability, discourages thorough investigation of claims, and shifts substantial financial and legal risk onto individual condominium owners.
II. The bill shifts financial responsibility away from condominium associations and onto individual owners. Condominium ownership is built on the principle of shared responsibility for shared systems. This legislation undermines that principle by allowing associations to transfer significant costs to individual owners, even when building-wide conditions or deferred maintenance contribute to, or originate, the loss.
III. The assumption that condominium unit owner (HO-6) insurance will adequately cover these increased costs is not accurate. Many HO-6 policies have limited loss assessment coverage, often well below $25,000, and typically exclude or limit coverage in cases where fault is unclear. As a result, owners could face substantial out-of-pocket expenses they reasonably believed were insured. With the inability to pay come fines, legal fees, and the potential loss of property.
IV. Increasing the cap from $5,000 to $25,000 is a dramatic shift in financial exposure for condominium owners, many of whom purchased their homes under the existing framework. This change would disproportionately impact middle-income homeowners and those on fixed budgets.
For these reasons, I respectfully urge you to reject B 26-0495 and instead pursue solutions that address rising insurance costs without shifting disproportionate risk onto individual condominium owners.
Thank you for your consideration and for your commitment to protecting District residents.
Sincerely,
[Your Name, Ward #]
Sources
Disclaimer
The author is not an attorney and this post should not be considered legal advice or interpretation, It is provided for general informational purposes only. Consult an attorney and your insurer.
