Risk & Business Magazine Gifford Associates Fall 2015 | Page 7

Getting to Know Your Condo
Minimize Any Gaps in Your Coverage
BY: TERRY MARKELL, PARTNER, GIFFORD ASSOCIATES

C

ondominium owners, much like
every homeowner, need to have
insurance to cover themselves against
the potential loss or damage of property.
However, Condominiums, unlike
traditional homes are governed by unique
condominium laws.
The Condominium Corporation
insurance is governed by the
condominium act which was passed
in Ontario in May of 2001. The condo
act suggests that every condominium
corporation in Ontario prepare and pass
a standard unit bylaw. The standard unit
bylaw describes what the condominium
corporation consider a standard unit.
There is no “template” for a standard unit
bylaw each condominium corporation
decides how it is to be written and then
must receive 51% agreement of the unit
owners before it passes as a bylaw. The
purpose of the standard unit bylaw
is to define what the condominium
corporation is responsible for insuring
and what the unit owner is responsible
to insure. The act also states that the
condominium corporation is required
to carry insurance in order to rebuild
the common areas and “standard
units” after a loss. If the condominium
corporation have not passed a standard
unit description, then the condominium
corporation’s insurance is responsible
for returning the unit back to how it was
originally built. The owner of the unit is
then responsible for taking care of any
modifications that have been made since
the building was built. Additionally, if the
condominium corporation has passed an
insurance deductible bylaw the owner
of the unit may be responsible to pay the
deductible on the corporation’s policy in
the event of a loss.
This is where the unit owners insurance
comes in. Every single unit owner
in the building needs to have their
own insurance package. This unit
owners package should be based on
the replacement value of the personal
property of the owners. Additionally,

there are extensions to these policies
which cover other things relating to the
condo.
Among those extensions are the
following:
• Unit owner’s improvements and
betterments, which covers upgrades
that have been made to the unit either
by the current owner or a previous
owner. This additional coverage can
sometimes be based on of the amount
of personal property coverage, it
can also vary between insurance
companies.
• Loss assessment, which provides
coverage for the unit owner’s share of
special assessments made to the unit.
There are qualifications in order for a
claim to be paid, the assessment must
be valid under the condo association
rule and the need for assessment
must be due to an insured peril
under the unit owners policy. Some
insurance companies have limits with
respect to an assessment because
of the Condominium Corporations
deductible.
• Unit additional protection, which
excludes improvements and
betterments is often where coverage
for the condominium corporation’s
deductible can be found. .
• Additional living expenses, which
helps cover costs above normal living
expenses in the event that the unit
owner needs to be relocated after an
insured loss.

• Sewer backup, which covers losses in
the event of sewer backups. Believe
it or not this is can be an issue even
in a high-rise. an example would be:
a sewer back loss causes damage to
the corporation equipment in the
basement which puts the power out in
the building which leaves the owners
with no heat in the middle of winter
and days until a replacement part can
be found. If you are not able to live
in your unit you must be insured for
sewer back up or there would be no
”insured peril” that