There is, as you seem to suspect, a difference between what your insurance will cover (or the association's insurance) and your liability for the damage. Either policy may have water damage coverage, or neither may, and the deductible may be more than the cost of the damage. My belief is that you can be liable for the damage even if you were not negligent. If the water flowed from your unit into another unit, the other owner can make a claim against you. If there was negligence, you might have a better chance for coverage, but all leaks don't arise from what one would normally consider negligence. You don't indicate exactly where the leak came from, so a precise answer is not possible. I would encourage you to pursue both insurance policies (yours and the associations), and you also may want to find out if your neighbor has his or her own policy. The neighbor is the most likely to have coverage under the neighbor's policy, whether there was negligence or not. Unfortunately, this type of situation arises frequently, and some insurance adjusters look for ways to avoid paying a claim. Whether it is worth fighting if the claim is denied all around is, in part, dependent on the cost of the damage.