It is estimated that nearly 40% of condo owners in the lower mainland do not have
their own condo insurance policy. One of the most common reasons provided by those
condo owners that have gone without a condo owner policy was because they thought
the major risks they face were already insured under the strata’s insurance policy.
While many condo owners are aware their strata corporation’s insurance policy do
not provide coverage for their personal contents, they are often unaware that there
are other unique risks that condo owners face, which are generally not covered by
a strata’s insurance policy. I have listed a few of the major risks generally not
covered by a strata’s insurance policy below:
While public liability is required to be insured by the strata corporation, personal
liability is not, which is why it is often not included in a strata’s insurance policy.
The desired limits for personal liability will differ for each condo owner so it
is often a coverage that the strata corporations leave to the owners to handle independently.
Public liability refers to the shared or common liability shared amongst all owners
of the strata corporation. Personal liability refers to the liability arising out
of your premises or personal action. For example:
Example 1 - you host a party and serve alcohol to your guests. One of your guests
decided to drive home after a few drinks and caused an accident that severely injured
several people. As the host, you could be found jointly liable for those damages.
In the past, hosts serving alcohol have in fact been found liable for the actions
of their guests. This is personal liability risk. There is a great article that discuss
this risk, which you can find here (starting page 6).
Example 2 - you are drawing a bath, when you receive an emergency call and you had
to leave to attend to this emergency forgetting that the tap was still running. The
water overflows and causes water damage to 4 units below you. The owners of those
4 unit or their insurance companies may take action against you for damages they
suffered as a result of your negligent actions. This is personal liability risk.
Loss Assessment is a unique risk to condo owners. Loss assessment refers to losses
assessed by the strata corporation to its owners in accordance to the strata corporation’s
governing rules / by laws. These assessments are usually made against owners as a
result of inadequate limits of insurance on the strata’s insurance policy. For example:
Example 1 - a visitor to the building is injured when they slipped and fell in the
visitor parking lot because the strata corporation did not arrange for proper snow
removal and salting of the visitor’s parking lot. The visitor suffered significant
injuries to her spine and became paraplegic. The visitor happened to be a prominent
athlete and as a result of her injuries, will no longer be able to continue her career.
The courts awarded her $8 million in damages, but the strata’s insurance policy only
provides coverage for public liability up to $3 million. The $5 million shortfall
in insurance would have to be paid by the strata corporation. The only way the strata
corporation could generate the funds to pay for the damages not covered by insurance
is to assess an amount for the loss to each condo owner. If there were 50 units,
then each unit would likely be assessed $100,000.
Example 2 - there is major damage to the building as a result of a fire. The strata’s
insurance company will pay for the damages, but there is a $50,000 deductible in
the strata’s insurance policy. This $50,000 would be assessed to the owners. In some
cases, if it is determined that the fire originated in a specific unit, the strata
corporation could even assess the entire deductible to the owner that caused the
fire, provided that the strata corporation’s governing rules / by laws permits.
A condo owner insurance policy (commonly referred to as condo insurance, contents
insurance, and condominium insurance) would provide coverage for the above risks
as well as other important coverage, such as:
A condo insurance policy would provide coverage for the owner’s personal property
from theft, fire, vandalism, and many more risks. Personal property may include clothes,
furniture, appliances, electronics, jewelry, art, collectibles, and much more.
Loss of Use
A condo insurance policy would provide coverage for loss of use of the unit. For
example, the condo unit suffered major damages as a result of a fire and becomes
temporarily uninhabitable. There would be additional living costs such as rent for
temporary housing and possibly additional food related costs resulting from the loss
of use of the unit. Condo insurance would provide coverage for those additional living
expenses. This is a very useful coverage because quite often the unit owner would
be required to continue making mortgage payments on the property despite the fact
they cannot reside in it. Without this coverage, this additional living cost could
become a significant financial burden.
Unit Improvements and Betterments
Quite often a condo owner will make improvements to their units. For example, a unit
owner may add custom cabinetry or shelving to increase storage space. These additions
or betterments are not considered as part of the building, as such they would not
be covered by the strata’s insurance policy. Condo insurance would provide coverage
for these additions and betterments.
The comprehensive condo insurance policies we offer, provide the above coverage and
much more for as low as $15 per month.
If you are interested in obtaining a quote, please contact one of our insurance advisors
to schedule a no-obligation personal consultation to help you find the right insurance
solution to protect your investment.