Two Policies, Not One
A condominium generally involves:
- The corporation's policy, covering the building and common property, arranged by the corporation and paid for through condo fees.
- Your own unit owner's policy, which you arrange personally.
Buyers sometimes assume the corporation's policy means they do not need their own. That is not how it works. Your contents, your improvements and your personal liability are generally your responsibility, and there are coverages specific to condominium ownership that exist precisely because of the gap between the two policies.
What each policy covers in a specific building depends on that corporation's insurance and bylaws. Get the specifics from an insurance professional rather than assuming.
Why the Deductible Matters to You
This is the part worth reading twice.
Corporate insurance deductibles can be substantial. When a loss occurs — a water escape is the classic example — the deductible has to be borne by someone, and depending on the corporation's bylaws and the circumstances, some or all of it may end up being charged to an owner.
A buyer who has not looked at the corporation's deductible has not established their potential exposure from a single incident originating in their unit.
How deductibles are allocated is governed by the corporation's bylaws and by legislation, and the answer in a specific case is a legal one. It is also a question to raise with your insurance broker, because coverage for this exposure is a normal part of a unit owner's policy.
What Buyers Should Look At
- What the corporation's policy covers, and to what limits
- The deductible amounts, particularly for water
- The claims history — how many, how recent, what for
- Whether premiums have risen sharply, and why
- Whether the corporation has had difficulty obtaining or renewing coverage
- Whether any conditions have been imposed by the insurer
- What the corporation's bylaws say about deductible responsibility
A claims history is genuinely informative about the building. Repeated water claims in particular tend to indicate something that has not been resolved, and they drive premiums and deductibles for every owner.
Insurance Shows Up in the Other Documents Too
Insurance is rarely a self-contained subject. It surfaces:
- In the financial statements, as a premium line that may have moved sharply
- In the minutes, where renewal difficulties and claims get discussed
- In special assessments, where a large deductible or uninsured loss has to be funded
If insurance costs are climbing in a building, the reason is usually recorded somewhere in the documents.
Get Advice From an Insurance Professional
We are not insurance brokers, and condominium insurance is a specialised area that has changed considerably in recent years.
What we can do is make sure the insurance information forms part of what you review, flag where a deductible or claims history looks like it deserves attention, and help you understand what it may mean for the property as a purchase. For coverage advice, speak with a broker who handles condominium unit owner policies.