The corporation’s insurance policy

The condo corporation has to be insured. Common sense calls for this as does Sections 99-106 of the current Condominium Act.

The Act says:
"The corporation shall obtain and maintain insurance, on its own behalf and on behalf of the owners, for damage to the units and common elements that is caused by major perils or the other perils that the declaration or the by-laws specify."

The Act states that “major perils” means the perils of fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots or civil commotion, impact by aircraft or vehicles, vandalism or malicious acts.

The corporation's insurance must pay for any damages to the common elements and will pay for damages to the owners' units only if the damage originated from a common element.

The corporation's insurance will not pay for any improvements to a privately own unit.

Cancellation
The insurance company can cancel the policy 60 days after they send the condo corporation notice by registered mail.

That gives the corporation two months to get insurance with another company.

Does it happen. It's rare but if there are too many claims or if the insurance company believes that the condo corporation is a bad risk the premiums and the deductibles will go up or the policy may be cancelled.

A condo in Vaughan had its policy cancelled after it burnt down twice in three years due to careless smoking. A condo in Montreal lost coverage for water leaks after it had two claims for water damage, one right after the other.

A condo that has too many slip and fall claims, has serious safety issues or city work orders may find big jumps in premiums, a loss of coverage or even the policy being cancelled.

Becoming a concern
In parts of Canada, condo corporations may find it harder to get insurance and when they do they may find that the premiums are far more expensive and/or the deductibles have increased to surprising levels. Read these news articles:

Insurers increasingly turning away from the condo sector
April 2015
Rising claims for water damage in condo buildings and inadequate regulation have led insurance companies to refuse new clients or demand higher premiums for coverage, adding fuel to concerns about quality in Canada’s fastest-growing housing segment.

In March, Aviva Insurance Company of Canada stopped taking on new business from condo corporations in Quebec, citing rising claims and weak legislation that allows owners to set aside insufficient amounts to cover repairs and maintenance, spokesman Glenn Cooper said this week.
http://bit.ly/1NLMrMD

Burnt out—twice
The owners in this small condo complex in York Region had the bad luck of being burnt out twice due to careless smoking.

Now they are being penalized by having to wait for their building to be rebuilt—for a second time—and by being hit with a huge increase in fire insurance premiums.
http://bit.ly/19SunBb

This article, from the Montreal Gazette, was a real eye opener.

Condo insurance: a dripping time bomb
November 2012
Major Canadian condo markets might be plagued with fears over high personal debt and overbuilding, but experts say an even bigger threat to owners involves problems with insurance. In a two-part series, The Gazette reveals how ignorance, bad luck, and a mix of rising claims and premiums have left some Montreal condo owners one fire or flood away from risking their investments. This week, we look at the risks of under-insurance.
http://bit.ly/1P6yQku

That has been followed by these articles.

Calgary condo insurance costs skyrocketing
June 2014
Coates, a consultant who works with condo buyers and boards, says there are likely two factors to blame for the increasing costs — owner negligence and natural disasters.
http://bit.ly/1nbQNQn

The Co-operators drops commercial condo insurance in Western Canada and Quebec
August 2014
Commercial condo insurance is no longer available from one of the country’s largest insurers, leaving some people in Calgary scrambling to find new policies on multi-family dwellings.
http://bit.ly/1oTzTmY

So we have another condo issue to worry about.

How many owners have checked to see how much insurance their condo corporation has and what are the deductibles?

Will potential buyers wisen up and check the specifics of the corporation's insurance before they buy? (I am betting they won't.)

Can you afford to pay the corporation's insurance deductible, on top of your own, if there is a leak originating from your unit?

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