The DC Condo Act change that shifts risk to unit owners and removes their ability to recover losses is being marked up for a full Council vote. There’s still time to stop it if you act soon. 

What’s being proposed

A new DC bill, B 26-0495, the Condominium Insurance Amendment Act of 2025, is being framed as a fairness measure. It’s anything but fair.

If you don’t look closely, the bill’s logic seems simple: If damage starts in one unit, that owner should bear the cost.

The bill proposes:

• 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”

This bill relies on identifying a single source for the cause of damages.

But 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. But many policies:

• Cap loss assessment coverage
• Exclude certain types of claims
• Limit coverage when fault is unclear
• Increase premiums when a subrogation clause exists

The bill takes away the 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 it?

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 that was damaged due to a neighboring unit owner’s negligence, or the deferred maintenance or a systen failure attributable to the association, could seek to recover the sum paid out to its insured through a subrogation action against the negligent party.

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.

• It 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

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 because they face higher risk.

Insurers may also 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.

Why is this especially important in DC?

Because 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 infrastructure (conversions) that hasn’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 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.

What the deductible pass-through cap does

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 much larger 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 or middle-class 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.

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 expenses. 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 of subrogation 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, this could be devastating for unit owners in some condominiums. Many condominiums facing nonwarrantability 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 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.

But many 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.

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.

The bottom line

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.

Write the councilmembers sitting on the Housing Committee today and make your voice heard.

Sample Email

Send to:

– Chair White- [email protected]
– Councilmember Pinto- [email protected]
– Councilmember Frumin- [email protected]
– Councilmember Nadeau- [email protected]
– Councilmember Bonds – [email protected]

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

BillTrack50

Goldman Pease

Williams Strohm

LegiScan

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.