Condominium Insurance - Are You Adequately Covered?

Buyers looking to purchase a condominium are often unfamiliar with this form of property ownership and how it might impact not only their intended use and enjoyment of the property but also other things such as insurance.  A recent online discussion forum among some Royal LePAGE colleagues has brought up an issue I felt worth sharing with my readers as it affects not only those that might be considering a condo purchase but those of you that are already condominium owners as well.

Fundamentally, insurance coverage that condominium owners take out is much the same as contents insurance for renters.  You are responsible to obtain coverage for your belongings etc. whereas the condominium corporation’s master insurance policy covers liability insurance for any accidents that may happen on the property as well as any losses incurred to the building through flooding, a fire etc.   

A unique feature of condominium insurance which individual owners need to secure is what is referred to as loss assessment coverage.  What is loss assessment coverage?  As an example, let’s say a party was injured on the condominium’s ground such as in the parking lot or elsewhere which resulted in a $1.5 million insurance claim.  If the condominium corporation’s policy has a liability limit of $1 million then under the condominium association's bylaws, each owner will be assessed a proportionate share to cover the balance of $500,000.  The amount of loss assessment insurance you have under your particular policy may or may not be enough to cover your share.

As insurance coverage for all of us seems to go up, some condominium corporations are attempting to reduce the annual premiums on their master insurance policies by increasing their deductible amounts.  These increased deductibles subsequently increase the financial burden on your loss assessment coverage so it is important to keep that coverage in line with what might be required should a liability payout ever be incurred.

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  Having sold many condominium properties over the years as well as having attended and spoken at annual owner’s meetings, I find that many condo owners don’t attend these meetings and or when correspondence comes from their property manager it is seldom opened or reviewed.   Here is just one example of why staying on to of your condominium corporation’s activities is of paramount importance.  Should an accident happen resulting in a hefty insurance claim that is not adequately covered via the master insurance policy held by your condo corporation, the last thing any owner wants is to have to reach into their wallet to cover a loss assessment against them for which they had inadequate loss assessment coverage.  My advice is to review your policy and talk with your insurance broker to make certain you are not exposed in this regard and as always, attend your owner’s meetings and review any and all correspondence that they or your property manager sends out.