Condo Insurance Primer

April 2017

Insurance is a necessity of condo life. Whether you own, live in or manage a condo property, insurance is required protection against surprises and unexpected costs.

Prudent use of insurance can help minimize losses. It provides protections and support for condo owners, residents and condo corporations.

Coverage comes in various forms. At times, the cost of certain coverage may be prohibitive in light of its potential value. Condo corporations, owners and renters all seek to balance purchased coverage and costs by selecting only the coverage they require. Premiums can be reduced by accepting a higher deductible in the event of claims.

Condo Corporation Coverage

Your condo corporation likely carries more than one type of insurance coverage.

General Liability Coverage protects against liability for injuries and damages that occur on the property. Property in this case refers to common areas of the building. Should someone be injured while on the property, coverage would pay for judgements or settlements up to policy limits. Insurance coverage is also used to pay for defending the corporation against lawsuits.

Insurance coverage should be adequate to reflect risks. A swimming pool would increase risk and may require a higher level of coverage. Visitor use of the swimming pool or allowing alcohol in common areas increases risk and will likely result in higher premiums.

Directors and Officers Liability protects the corporation against lawsuits arising from injuries and property damage. It will also protect directors against lawsuits for errors so long as they have maintained their fiduciary obligations.

Fidelity Coverage protects the corporation in the event funds are stolen from corporation accounts.

When it comes to insurance, level of coverage can be more important than price.

Residential Coverage

Tenant Insurance, purchased by tenants, is intended to protect possessions in the event of loss and liability for accidents. It also protects against liability for damages arising from problems within a rented suite.

Rental Coverage is for the owner of a condo suite to protect against property damage by a renter. Both condo owner and condo corporation are protected against problems arising from renters. A kitchen fire causing $45,000 in damage to the suite and common areas covered by rental coverage protects the condo owner if a renter is unable to pay for damages and lacks adequate coverage.

Condo Owner Insurance provides a higher level of coverage for condo owners consistent with their liability as owner of a condo suite. It does not generally provide coverage for loss or damages arising from commercial activities such as rental of a condo suite.

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