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Who pays for water damage to my condo in Ontario?

When water damage occurs in a condo complex, whose responsibility it is to pay for repairs is not always obvious. Generally, if the water damage affects common property the condo corporation’s master insurance policy will cover it and any damage that results from it. Part of the cost can still be passed on to owners.

Does the damage exceed the deductible?

If the water damage affects any of the units or the common property and the damage exceeds the deductible on your condo’s insurance, it can be claimed on the building’s master insurance policy.

Are there betterments and improvements?

If the water damage will cost more to repair than the deductible, the condo corporation’s master insurance policy will pay for repairs. This does not include improvements and betterments. If a unit is damaged, any renovations that have been done will not be covered.

Owners can claim the water damage on their condo insurance for their unit to have the renovations covered. Owners should make sure that betterments and improvements are covered by their policy.

Insurance claim or special assessment?

If the water damage exceeds the condo corporation's insurance deductible, a decision will need to be made whether it will be claimed on the master policy or passed on to condo owners as a special assessment. Claiming the water damage loss on the condo insurance policy will mean higher premiums when it is renewed or a higher water damage deductible. To avoid this, the cost may be allocated to owners as a special assessment, which means that they each must pay for their share of the repair costs. Condo owners need to make sure that their condo insurance covers special assessments.

If the water damage is claimed on the condo insurance policy, condo owners will need to come up with their share of the deductible. They should make sure their insurance policy covers this because condo master insurance policies can have high deductibles, sometimes as high as $50,000 or $100,000. If a condo owner is liable for the water damage they could be forced to come up with the entire amount.

Is the water damage overland flooding or sewer backup?

Most condo master policies do not cover sewer backup or overland flooding. This type of coverage is available as an endorsement to owners’ condo’s insurance but if it is not covered and disaster strikes it could mean a special assessment.

Did the water damage destroy a condo owner’s belongings?

Condo contents are not covered by the condo corporation’s master insurance policy. If an owner’s personal property is damaged it will be covered by the contents insurance included with their condo insurance policy. Depending on how high their deductible is and how extensive the damage to their contents is, they will choose to make a claim or pay for the damage themselves.

Condo owners need insurance

Condo owners end up paying for water damage in their building one way or another, whether it is through higher condo fees, deductibles on the condo corporation insurance policy, special assessments, or out-of-pocket expenses for damage to their belongings.

Condo owners need to have the right insurance for their unit to mitigate the risk of large losses and minimize the potential costs of water damage during their ownership of their condo.