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Either the responsibility for this will be with the neighbor or the condo association. Most likely it will be the upstairs neighbor because the air conditioner compressor is most likely not a common element but instead is related to specific units. What the insurance company is probably claiming is that the air compressor leak was not caused by negligence and therefore, the neighbor is not responsible. However, most condo association documents state that an owner is responsible for damage to another unit caused by the operation of defective appliances within that unit. Therefore, you should check your condo association documents to make sure it has this strict liability standard.
Additionally, you could always try to sue under a negligence standard and claim that the neighbor must have not had their compressor serviced for a while, which would be negligent because it should be checked yearly.