October 2024
When faced with an increase in the cost of insurance for a condominium building, one approach to lowering costs is to raise the insurance deductible. This has the effect of reducing the corporation’s insurance costs and increasing those of owners.
Condominium owners should be aware of how much coverage they have for their corporation’s insurance deductible. Obtaining this information may not be easy. Insurance companies provide this information in different ways which may not be transparent. How this deductible is applied, and who is responsible for paying it depends on your insurance company and how your condominium corporation deals with the claim.
One condo owner’s unit flooded in March 2022 after the toilet’s supply line broke and caused a flood in their unit, neighbouring units and common areas. Nobody was home at the time so water ran for hours before being detected. Total cost for repairing all damage was $52,657.
The owner was insured as was the condominium corporation. Two years earlier the corporation raised its deductible from $25,000 to $50,000. The owner never increased coverage for the corporation’s higher insurance deductible and was responsible for paying $27,657. Had the owner increased their coverage, their out-of-pocket costs would have been limited to their homeowner’s policy deductible.
This scenario could play out differently depending on the insurer and how a condominium corporation deals with a similar situation.
Condominium owners should be aware of their corporation’s insurance deductible, which is included on the Certificate of Insurance provided by their corporation. They should then contact their insurer to understand the limits of their coverage and how a similar situation would be handled.
