Communities maintain insurance to protect against certain events with policies varying in terms of cost, coverage and deductibles. When something unexpected goes wrong at home, insurance offers financial protection. A flooded toilet in your suite causing damage to your and other units, water flooding from above and fire are just three possibilities.
Your corporation maintains insurance to protect common areas of the building that include property and liability coverage. When purchasing a condo, a “certificate of insurance” is provided to new owners. These policies do not protect contents of individual suites against damage or theft. Understanding the policy maintained by the corporation is necessary to determine what type of insurance may be appropriate for residents.
Various types of coverage are available for the corporation policy:
- General Liability Coverage protects against liability for injuries and damages that occur on the property. It provides coverage against lawsuits relating to accidents that may occur on corporation property. A swimming pool would increase risk and may require a higher level of coverage. Visitor use of the amenities or allowing alcohol in common areas increases risk and may result in higher premiums.
- Directors and Officers (D&O) Coverage protects personal assets of condo directors who have volunteered their time to benefit the community. This coverage is intended to protect directors and officers of the corporation who may be sued while fulfilling their obligations, and against accusations they have failed to carry out their fiduciary obligations.
- Fidelity Coverage protects the corporation should funds be stolen from corporation accounts.
Every condominium resident, owner or tenant, should maintain insurance coverage to protect against damage or loss to their personal property. Condo Owner Insurance provides coverage for owners consistent with their liability as owner and resident of a residential condominium suite. Tenant Insurance, purchased by tenants, is intended to protect possessions in the event of loss, liability for accidents, and against liability for damages arising from problems within a rented suite. Rental Coverage, purchased by the owner of a condominium suite, is intended to protect against property damage by a renter. Should a tenant cause $45,000 in damage to the suite and common areas, and be unable to pay for damages or lack adequate coverage, this offers financial protection to the condominium owner.
Water is estimated to account for up to 40 percent of all claims. Deductibles can range from $5,000 to more than $100,000. Condominium corporations implementing effective preventative and detection measures to avoid water problems should have fewer and less costly damage claims thereby reducing fees paid by condo owners.