Most condo insurance claims are the result of liability relating to general and seasonal hazards (slipping, tripping or falling injuries), water damage, and theft of funds.
General and Seasonal Hazards
Slipping, tripping and falling may be caused by slippery floors or uneven surfaces such as elevator gaps. During winter slippery driveways, walkways and parking areas present hazards less likely other times of the year.
Many of these accidents are unavoidable, yet this does not prevent individuals from believing otherwise and initiating a lawsuit. Liability insurance is purchased by condo corporations to compensate individuals who may be injured due to hazards on common areas of the property. Aviva Canada reports that slip and fall accidents in Canada represented over 50% of injury hospitalizations between 2002 and 2004, and more than 10,000 in-hospital deaths.
Another insurer, Zurich, reserves more than $1 billion to pay for such claims throughout North America. Many of these claims may be paid by an insurer even when no judgments are awarded.
Condo corporations defending against liability claims from these winter accidents have greater protection when they log the time and date snow and ice clearing services are performed. When an outside contractor performs these services, the condo corporation may be protected against liability claims.
Water damage has replaced fire as the greatest cause of condo insurance claims. A July 2013 flash flood in Toronto is estimated to have cost insurers $1 billion. Earlier severe flooding in Alberta was estimated to have cost insurers $1.7 billion.
Climate change is expected to increase the frequency of severe flooding events. In areas of greatest risk for severe flooding, flood insurance coverage may no longer be available.
Water damage can be mitigated by managing the risk of sewer backups. Aqua Fast Flush, which identifies the source of and fixes water drainage problems, advises that “regular maintenance of water systems (e.g. stacks) includes flushing of drains that can back up. Maintaining these water systems reduces the likelihood of water backup and damage. Residents can minimize problems by not putting waste food, oil and especially greasy food down the kitchen drain or garburator but rather choosing a green waste solution. Fewer avoidable problems can reduce insurance claims and premiums.”
Fraud or Theft of Funds
Condo corporations with millions of dollars in revenues have large bank accounts that can be enticing to those with access to these funds. Most theft of fund situations may go unreported.
Sound financial management practices that reduce the risk of theft of funds can be found in the Condo Archives under Financial Management, Condo Fraud.