If an association's CC&Rs are silent on the issue, HOA boards may adopt a policy on how to handle the deductible if there a loss covered by insurance. For example, if the association's property damage insurance has a $5,000 deductible and an owner suffers a $25,000 loss due to water damage· from the unit owner above, the deductible can be handled in one of the following ways:

• If a loss is attributable to an owner's negligence or intentional act that results in a claim against the association's insurance policy, the owner that caused the loss pays the deductible. That would mean the person in the unit above that flooded the lower unit (if due to his or her negligence) would pay the $5,000 deductible. The board can hold a hearing and impose the cost as a reimbursable special assessment against the owner that caused the loss.
• The lower unit that benefited from the association's insurance pays the deductible. In reality, the person does not actually pay the deductible, the $5,000 is deducted from the $25,000 loss so the amount paid to the lower unit is only $20,000 instead of $25,000. If the person in the lower unit wants to recover the $5,000 withheld from the payout, he or she can sue the owner of the upper unit in small claims court.
• If no negligence or intentional act caused the loss, the deductible is apportioned against all claimants according to the percentage each claim bears against the total of all claims for the loss. For example, if the unit owner suffered a $25,000 loss to his or her unit, and the association suffered $25,000 in damages to the common areas, the unit owner is responsible for 50% of the deductible and the association is responsible for the remaining 50%. No one actually pays the deductible out of packet since the proportional amounts are deducted from the respective payouts.