Insurance Registry – Risks of being uninsured

October 2020

Insurance takes on greater importance, and complexity, in condo communities.  In a single family home insurance is a personal choice.  In a condo community failure to adequately insure has repercussions throughout a building and among neighbours.  To protect the community some condo corporations choose to impose minimum standards or implement an insurance registry.

Condo corporations are required to maintain insurance to protect building assets.  Condo owners and tenants are expected to do the same.  It is vital that condo owners and residents ensure their units are adequately insured against accidents that cause damage to their property and those of neighbours.

Any condo owner or resident allowing their insurance to lapse, or failing to obtain insurance, can cause serious problems for neighbours and the corporation.  An insurance registry seeks to avoid these problems.

Maintaining a registry of individual homeowner and tenant insurance policies is an effective way to monitor who has proper insurance, what is insured and when coverage expires.  Each condo owner and renter provides a copy of their current insurance policy to the management office for this purpose.

Owners and tenants are responsible for insuring the units they own or lease.  This insurance is intended to cover just about everything inside the outer walls of the unit including finishings and improvements from original building construction.  Failure to maintain insurance risks not being able to restore the unit to its condition prior to damage.

In condo communities it is not just a negligent owner that suffers.  Innocent residents are directly affected by what happens in other units in the building.  One unit owner failing to maintain adequate insurance coverage causing damage to other units passes liability to those who are insured including the condo corporation.  This causes the cost of insurance to increase for everyone.  The offending owner places all their assets at risk if sued to recover losses.  An insurance registry protects innocent residents and owners from a negligent owner.

Insurance maintained by the condo corporation is unlikely to be sufficient for most owners.  This insurance will typically only return a unit to the condition it was when built.  For a new unit this may not be a concern.  Older units may have been renovated, updated or upgraded many times by previous owners or tenants.  In the event of damage, current owners or tenants would have to pay for anything they are responsible for at the time an incident occurs.  Without insurance it may not be possible to replace electronics, clothing, furniture, and cover temporary living accommodation.

A greater concern for those without proper insurance coverage is paying for damage to common areas and other units.  A water leak in the bathroom or from a faulty dishwasher can damage other units or common areas.  As a unit owner or resident, knowing your community maintains an insurance registry and ensures everyone maintains proper coverage provides protection against accidents occurring beyond your unit.  Should the water leak damage common areas which do have insurance coverage, the responsible resident could be required to pay an insurance deductible that can be tens of thousands of dollars.

Some condo residents feel insurance is a waste.  They know when to stop filling a tub and never had a fire while cooking.  These events may appear extreme or unlikely to occur.  Yet accidents happen.  Someone falls asleep while cooking.  They may have gone to answer the phone while filling a bath and forget to return.  Water pipes fail.  Regardless of the reason, these events occur on a regular basis in high-rise buildings.  Insurance protects you from accidents occurring in your unit and those occurring in other units that affect you.

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