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Osherow v. Orleans Construction Corp.

A-3684-03T3 (N.J. Super. App. Div. 2005) (Unpublished)

CONDOMINIUMS; INSURANCE; INSPECTORS — A condominium association’s casualty insurance carrier has no relationship to any unit owner and damage or other inspections made by or on behalf of the carrier are not for the benefit of any particular unit owner; thus, an inspector does not undertake such a duty by examining portions of a particular unit in connection with a loss.

A personal injury claim was filed on behalf of a minor alleging that he suffered “from allergies and asthma, attributable to mold, as a result of the negligence of [an insurance company’s] claim adjuster and [the insurance company’s] breach of its contract of insurance with” the condominium association within which the child resided. The child’s parents’ condominium sustained damage during a winter storm. “Water seeped through the roof, attic, walls, ceilings and floors.” The parents contacted the association. The association contacted its insurance carrier. A claims adjuster inspected the condominium on behalf of the insurance carrier. When one of the parents “asked the adjuster to examine the attic, [] he declined and advised her that he would keep the claim open so that any additional damage she discovered could be added to the claim.” The parents took no action to inspect the attic.

The following winter, their son began to experience breathing difficulty and he was hospitalized for that reason. He was diagnosed as “suffering from asthma and from allergies to mold and cats.” A subsequent inspection of the attic “resulted in the discovery of wet insulation and significant mold and mildew.” The parents were making a claim that they were an “insured” under the condominium association’s insurance policy and, for that reason, the insurance carrier owed them a responsibility. The policy, however, although naming them as an “insured,” contained the following limitation: “[O]nly for liability arising out of the ownership, maintenance or repair of that portion of the premises which is not reserved for that unit-owner’s exclusive use or occupancy.” The parents could point to no language obligating the insurance carrier “to inspect or supervise maintenance and repairs.” According to the Appellate Division, the lower court properly held that the insurance company’s “claims adjuster had no duty to conduct an inspection for the benefit of” the parents. The insurance carrier and the unit owners had no relationship. The claim adjuster only inspected damage to the condominium unit “for the purpose of determining the extent of [the insurance carrier’s] obligation to the Association.” The unit owners, “as the owners and residence of the unit, were in a superior position [to that of the insurance company’s claims adjuster] to discover wet insulation and moisture in their own attic, and detection of such signs of damage requires no special expertise.” Further, the unit owners “had explicit notice that the adjuster did not consider the attic and specific invitation to submit an additional claim for any damage in that area.” On those facts, the Court held that the parents (on behalf of their minor child) could not “reasonably argue that imposing a duty on the insurer to inspect” for their child’s benefit was “consistent with the dictates of fairness and policy, ..., or that [the insurance company’s] claims adjuster assumed that duty by undertaking inspection of the attic.”

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