July 2023
Insurance is financial protection for when unexpected emergencies arise.
Master Policy
The condominium corporation maintains a master policy that provides some protection for all condo owners.
There are three main components of the Master Policy. General Liability protects the corporation against liability for injuries and damages that occur on the premises. Directors and Officers Liability protects board members against claims of damage resulting from their “good faith” decisions. This does not protect directors against deliberate fraud, or injuries and property damage caused by negligence. Fidelity Coverage protects the corporation should anyone it employs embezzle or steal money or property, or commit a serious transgression that costs the corporation.
Personal Coverage
Condo owners and renters require personal coverage to address what is not included in the master policy. This includes personal possessions, appliances, furnishings, flooring and cabinets. Condo owners can be held liable for damage to other suites or common areas. Landlords require protection against tenants that fail to maintain adequate insurance coverage. Without this protection the owner of a unit with a kitchen fire or overflowing bathtub causing damage beyond the suite could be responsible for paying a deductible in the tens of thousands of dollars.
Tenants and owners maintain separate insurance policies for their home. If renting or subletting a property to a tenant, be sure to inform the insurance company to avoid being responsible for major repairs relating to any uninsured tenant.
Insurance is an annual purchase and coverage should be re-evaluated every few years. Deductible, standard unit bylaw, claim history and amenities all impact on the annual premium. A higher deductible and standard unit bylaw can reduce the cost of a Master Policy while making owners and tenants more accountable for what occurs in the unit.
Never misrepresent anything when obtaining insurance. Each policy is structured to your building or home situation. Misrepresentation is grounds to decline a claim based on false information.
Avoid bargain shopping. When pricing out an insurance policy, lowest price should not be the primary consideration since this typically results in reduced coverage. The board and management should understand details of what they are purchasing for the Master Policy, and put less focus on the total premium. Owners and tenants have a comparable obligation when obtaining personal coverage.
