Reasons why Ontario condo owners should know their condo corporation's insurance policy
As a condo owner, you will be dealing with two insurance policies – your condo insurance and your condo corporation’s master condo insurance.
1. Your condo insurance needs to complement your condo corporation’s insurance
Your condo corporation’s insurance policy covers the building and common areas but it does not cover you or your unit. You need to purchase condo insurance for your unit and you need to make sure it covers anything the master insurance policy does not.
2. Some parts of your condo may or may not be covered by your insurance
Different condo corporation master policies have different definitions of what is covered as part of the building. You need to understand the details of which parts of your condo are covered by the corporation’s insurance policy.
3. Deductibles
Your condo corporation’s condo insurance policy covers common areas of the building. If there is a loss or injury in a common area like a lobby or hallway, your condo’s insurance will cover legal costs and damages for the injured person or repairs of common property. But your condo’s master insurance policy may have a high deductible. The condo corporation may split this deductible between all of the condo owners and this can be very expensive. In some cases, if a condo owner is liable for the injury or damage, they must pay the entire deductible.
Your condo policy needs to protect you from high deductibles for your condo corporation’s insurance and it will offer coverage called loss assessment. It will help you pay the deductible on your condo’s insurance policy. For this reason, you need to understand your condo’s insurance policy and know what the deductible is.
4. Assessments
Loss assessment coverage is also a necessity for covering damage to your building that exceeds the condo’s insurance limits and for repairs that are not covered by the reserve fund. If there is major damage to your building, the condo owners will need to cover what the condo corporation's policy does not. The same can apply to major repairs. If your building needs a new roof, for example, and there is not enough money in the reserve fund, the condo owners will have to come up with the rest.
The condo corporation will issue an assessment to owners and they will be responsible for paying it. Assessments can often be unaffordable and need to be paid quickly. Your condo corporation’s insurance policy's loss assessment coverage will help you pay for an assessment. You need to understand your condo’s insurance policy so you know what the coverage limits are so you can purchase the right amount of coverage on your condo insurance.
5. You should know if your condo’s insurance policy is all risks or named perils
You need to know specifically which risks are covered by your condo’s insurance policy. Your condo corporation’s master insurance policy will be one of two types – named perils or all risks. Named perils covers only losses listed in the policy and all risk covers anything that is not specifically excluded. Find out which type your building has and what is included. You should consider adding coverage for risks that are not included by your condo’s master policy.
