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Insurance. The Condominium Corporation & The Condominium Unit Owner. A presentation for The 2008 Toronto Condo Show, by Darlene Cade, CSIB, BSC., Cade Associates Insurance Brokers Limited and Michael H. Clifton, M.A., LL.B., ACCI (Law), Clifton Kok LLP Legal Counsel. Introductions.

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The Condominium Corporation

& The Condominium Unit Owner

A presentation for The 2008 Toronto Condo Show, by

Darlene Cade, CSIB, BSC., Cade Associates Insurance Brokers Limited and

Michael H. Clifton, M.A., LL.B., ACCI (Law), Clifton Kok LLP Legal Counsel

  • Who we are
  • What we’ve brought you
let s step back in time to just those few minutes before the toilet overflows

Let’s step back in time to just those few minutes before the toilet overflows….


did we pay the insurance premium

Did we pay the insurance premium???

And before we talk about toilets…

What type of insurance do you need?

…What type of condo are you?

  • Condos come in all shapes and sizes! Including:
    • Multi-Storey Buildings;
    • Townhouses (side-by-side or stacked);
    • Stand-alone (detached) buildings;
    • No buildings at all (vacant land condominiums);
    • No units at all (common elements condominiums).

Our discussion will be limited to what is relevant for Standard Condominium Corporations:* and in respect of them, whatever the shape and size, there is always a Condominium Corporation and a Unit Owner.

*(For other types of condominium, see your insurance and/or legal counsel for advice.)

the corporation s insurance
The Corporation’s Insurance
  • The Ontario Condominium Act, 1998 obliges Standard Condominium Corporations to insure:
    • All of the common elements, and all of the units excluding “improvements”; (more on this after)
    • “boiler, machinery, pressure vessel and motor vehicle” insurance, if such items are owned and/or used
    • Commercial General Liability related to the premises and the occupation and operation of the condominium;
    • If available, Directors & Officers liability coverage.
a bit about improvements
A Bit About “Improvements”
  • “Betterment” is not a term in the Act. It is no longer accurate to use the term “Betterment” or “Betterment & Improvements” for condominium corporations in Ontario
a bit about improvements1
A Bit About “Improvements”
  • An “Improvement” is any part of a unit that is not defined as “standard” in the condominium corporation’s “standard unit definition”.

NOTE: If there is no “standard unit definition” there are no improvements!

a bit about improvements2
A Bit About “Improvements”
  • The term “standard” has nothing to do with what the Builder originally installed. It can include owner-made changes to the property.
  • Likewise, Builder-installed components of the unit can be defined as “improvements”.
  • Therefore, it is very important to read and understand your condominium’s standard unit definition. (Hopefully to be found in your by-laws.)
a bit about improvements3
A Bit About “Improvements”
  • Standard unit definitions can vary from corporation to corporation – you cannot rely on anyone else’s definition – be sure your insurer understands yours! There are 2 basic extremes:

“Status Quo”:

A “status quo” definition aims to preserve just that: the “status quo”. This type of definition often includes a detailed table that may provide specifications of certain fixtures, including paint shades, faucet styles and sizes, trim, counters, counter-tops, flooring, etc.

“Bare Bones”:

This definition makes only the minimum components of the unit “standard” – such as unfinished boundary materials or “shell” of the unit (such as dry wall and sub-floor), and basic components required for the supply of heat and utilities (but not necessarily including any fixtures that use them).

a bit about improvements4
A Bit About “Improvements”
  • The condominium corporation is only required to insure “standard” components of the unit. The unit owner is responsible to insure all of the “improvements”.

Which brings us to the next topic…

unit owners ideal insurance
Unit “improvements”

Personal Property of the Unit Owner

Personal Liability of the Unit Owner related to ownership, occupancy & use of the Unit

The Package also includes:

Contingent insurance

To rebuild own Unit if the Corporation fails to carry sufficient insurance to rebuild

Loss Assessment

To pay assessments imposed by the Corporation related to an insured loss – i.e. Corporate Deductibles

Unit Owners’ “Ideal” Insurance
what every unit owner must ask
What every unit owner must ask:

Do I have sufficient insurance limits to rebuild my Unit, with all my desired improvements?

claims for unit damage
Corporation’s Concerns

Claims Frequency:

i.e. burns to floor, fire damage to cabinets, countertops and water damage claims

Insurance Costs increase

Cost of insurance is passed through common expense to Unit Owners

Dissatisfied Unit Owners at the next condo meeting!

& Action Plan

Start with a clear and sensible Standard Unit definition (and make sure the Owners know what it says!)

Better Risk Management awareness to Unit Owners

Increase Corporate insurance Deductible

Unit Owner pays for damage to own unit under the deductible amount

Claims for Unit Damage
situation 1 within one unit
Situation 1 – Within One Unit

Damage in Unit A, affecting only Unit A

situation 2 unit to unit
Situation 2 – Unit to Unit

Damage in Unit A, affecting Unit B

Common Elements?

situation 3 unit to units
Situation 3 – Unit to Units

Damage in Unit A, affecting Units B, C and D

situation 4 unit to common element
Situation 4 – Unit to Common Element

Damage in Unit A, affecting only part of the Common Elements

situation 5 common element to unit
Situation 5 – Common Element to Unit

Damage in Common Elements affecting Unit A