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Water from a Neighbor's Home

Water escapes from the home, condo, or townhouse next door, or from above, and damages your insured's property. It can come from a burst supply line, an overflowing tub, a failed water heater, a roof drain, a sump pump pointed the wrong way, or grading that sends runoff downhill. The neighbor did not cause it on your insured's policy, so this is almost always a recovery opportunity.

What it coversUnits above and next door, condo declarations, runoff, sump pumps

Step-by-step checklist

Identify

Contact the claim adjuster right away. Ask them to hold the scene and for permission to retain an expert at the client's expense. Note the call in the file.
On every claim, ask the client whether they want an origin and cause investigator to review the scene, or confirm one is already assigned. Note their answer in the file so the decision is on record.
Make sure no evidence is touched or moved until the expert has secured the scene
Get the client's approval for the scene exam cost. Most run at least $1,600 with travel, the day rate, and expenses.
Find the source unit and the exact fixture or area the water came from
Get the neighbor's name, and whether they own or rent
For condos, find out if the source is inside a unit or in a common element

Hands off until the expert arrives. Nothing at the scene gets touched, moved, repaired, or thrown out until the origin and cause investigator has secured it. Evidence that's moved early can sink the whole recovery.

Notify

Notify the neighbor, their landlord if they rent, and the HOA or condo association
Ask each for their insurance information

Investigate

Photograph the source before the neighbor repairs it
Hold the failed part for a joint exam
Get the plumber's invoice from whoever fixed the source

Demand, negotiate, and settle

Send the demand packet
Follow up, then send the second demand if needed
Review the release, pay the deductible, and close

1. Identify

How these losses happen

A burst supply line, toilet, washing machine hose, or water heater in the unit above or next door
An overflowing tub or sink left running by the neighbor or their guest
A neighbor's sump pump or downspout pointed at your insured's home
Regrading, a new driveway, or landscaping that sends runoff onto your insured's lot
A shared wall or roof drain the neighbor or association was supposed to maintain
A failed part the neighbor's contractor just installed

Is there anyone to recover from?

What you find	Who may be responsible
The neighbor's fixture or appliance failed	The neighbor. Also the maker or installer if the part was defective or just installed.
The neighbor's tenant left water running	The tenant. The landlord too if they knew about a problem.
A common pipe, roof, or drain in a condo	The association, if it had to maintain it
The neighbor's contractor worked on the line	The contractor
Runoff from the neighbor's grading or downspouts	The neighbor, and the landscaper or builder who did the work
The source was in your insured's own unit	Usually no recovery

Condos and HOAs: read the declaration and bylaws. They say who must maintain each pipe and who pays for water damage. Many make the unit owner responsible for damage coming from their unit.

2. Notify and investigate

Evidence checklist

Photos and video of the source, and of the water path into your insured's home
The failed part, held for a joint exam
Plumber's or contractor's invoice that names the cause
Association incident report, meeting minutes, and past leak complaints
Condo declaration, bylaws, and maintenance rules
Lease, if the neighbor rents
Mitigation records showing the moisture readings

Mitigation caution: sometimes the mitigation company makes the damage worse by not drying the home properly. Document this clearly with their daily readings and photos.

3. Demand, negotiate, and settle

Liability theories: negligence, nuisance, trespass, breach of the condo declaration or bylaws, product defect, and negligent installation.

Defenses to expect

Defense	How to answer it
It was a sudden, unforeseeable failure	Ask for the age of the part and when it was last checked. Old hoses and water heaters are known risks.
The association is responsible, not me	Check the declaration. Put both on notice and let them sort it out.
The condo documents waive subrogation	Read the waiver. Some only cover the association's own policy.
Your insured's own pipe failed too	Show the water path and the moisture readings that point to the source

4. Letters for this loss

Step	Letter
Identify	Subrogation Opening Letter to Insured
Notify	Notice of Subrogation Interest and Insurance Request, to Adverse Carrier
Investigate	Evidence Preservation and Joint Scene Exam Notice, Joint Lab Exam Notice
Demand	Subrogation Demand to Adverse Carrier
Negotiate	Second Demand with Escalation Notice
Settle	Release Review Checklist, Deductible Reimbursement

Related guides: Supply Lines, Water Heater, and Water Left Running in Vacant Homes.