What property insurance does my condo have?
Condo corporations are required by law to be insured against:
- Damage to units and common elements
- Liability resulting from breach of duty to keep common areas safe or use of machinery
- Liability for directors and officers of the corporation being held personally liable while carrying out their duties. This type of insurance does not apply to directors that do not act in good faith.
Common Element or Vacant Land condo corporation have different insurance requirements.
A corporation’s property insurance covers damage by major perils like fire and flood to common elements and units but does not cover any improvements or non-standard elements of those units.
Do I need personal condo insurance as an owner?
Your condo may require that you get it – and even if they don’t, you should still do it.
Your condo corporation’s insurance only covers what’s included in the standard unit, not upgrades or personal belongings. Your personal condo insurance covers the gaps for non-standard parts of your unit. Speak with an insurance professional for advice that fits your situation.
What is a standard unit?
Your condo’s governing documents define the standard unit to clarify what portion of your unit is their responsibility to repair and insure. Generally, standard units include walls, doors and plumbing. Anything not included in the definition outlined in your condo’s governing documents is considered an improvement, which owners are responsible for insuring and repairing on their own. Generally speaking, these non-standard elements tend to include appliances, flooring, etc. Make sure to speak to your board or manager before making repairs or alterations to your unit.
What if a condo does not have a standard unit definition?
A standard unit definition clarifies repairs and insurance responsibilities. Without it, a corporation may be liable for additional damages and face higher insurance premiums.
Boards should seek legal advice when drafting or updating the standard unit definition.
What is a deductible?
A deductible is the amount you pay as an insurance policy holder before your insurance company releases funds to cover your claim.
For example, imagine this scenario – You bought a new condo two years ago and you immediately signed up with an insurance company to be covered for flooding damage in your unit. You decided to go for a policy with a $50 monthly payment and a $1,000 deductible.
Today, you’re trying to replace your flooring because of damage sustained due to an overflowing toilet. You speak to your insurance company and find out that it will cost $10,000 to replace your hardwood floors, and that your policy will cover you. Great! However, since your policy has a $1,000 deductible, you will need to pay that amount to your insurance company first before they re-imburse you the $10,000 you need to replace your floors. Your total out of pocket costs are just the $1,000 deductible plus your monthly premiums that you have been paying the last two years.
Insurance companies also offer policies with smaller deductibles, but they usually come with higher monthly premiums. It’s up to you to decide which kind of insurance policy is right for you!
Who pays the deductible?
Most of the time, condo owners and corporations pay their own deductibles in situations where both have to make insurance claims to address damage.
Depending on the policy, deductibles can range from a few hundred dollars to tens of thousands.
However, condo owners should understand that sometimes corporations may have by-laws that define some circumstances where owners will be responsible for paying the condo corporation’s deductible. One common example is a situation where an owner causes damage to other units and common elements due to negligence (like causing a major flood that affects many units). See this 2023 case from Etobicoke as an example.
Condo corporations should communicate any changes to their insurance policies and insurance related by-laws clearly to owners. It’s a good idea as a condo owner to explore insurance policies that cover you for situations where your condo corporation asks you to pay for their deductible. Speak to your insurance broker about this.