Water damage legal liability is an area of high risk for owners of both residential and commercial condominiums, especially if the units are multi-level or stacked units. Water damage legal liability insurance provides protection to a person or business entity that unintentionally causes water damage to another property. To be covered, the water damage usually must be caused by a sudden event or accident, as opposed to a slow long-term leak. The event must be unforeseen and unexpected such as the rupture of a water heater or pipe.

Water damage legal liability insurance policies generally cover both property damage, legal expenses, and injuries. These policies are not identical, so it is important to read the policy carefully. There may be limitations and/or exclusions. Water damage legal liability insurance can be included as a requirement in CC&Rs.