Where does a condo corporation’s insurance policy end and a resident’s policy begin?

There are a few key differences between a condo resident’s personal insurance policy and the insurance policies that condo corporations purchase for their properties. The main differences centre on what parts of the building are covered, and who is responsible for repairs or liability in the event of a situation that results in a claim.

Condo corporations

A condominium corporation’s policy is a commercial insurance policy that covers damages and liability affecting all common elements in the building. Each condominium has its own definition for what constitutes a common element — a condo board should be able to provide residents with a clear definition of these elements.

Premiums on this policy are paid by the corporation, and in the case of a loss or damage, the corporation is responsible for dealing with the insurance claim. The residents of a condominium typically pay a share of the deductible in the event of a loss.

Owners

An owner’s personal insurance policy is a consumer policy that individual condo owners are responsible for purchasing. Condo owners pay the premiums on their own policies, which cover everything in their unit that is not deemed a common element. This policy also protects the resident’s contents and provides liability coverage for issues that originate in their unit. Personal insurance policies will also kick in if damage to a common element of the building requires residents to pay a portion of the building’s deductible.

Like all home insurance policies, a resident’s insurance policy also includes a liability component that protects the resident outside of their home. For example, if a resident visits a friend’s home and shatters their glass door, the resident’s policy will protect them if they’re liable for the damage.

Renters and roommates

It’s important to remember that an owner’s personal insurance policy will protect condo owners, but will not cover losses for roommates or tenants who are paying rent to live in a condo. Renters can be covered by a separate tenant policy.

An important point for condo owners to consider relates to their building’s deductible. In some cases, residents have found themselves underinsured and paying out of pocket to help cover their building’s deductible after a claim. It is important that condo corporations explore ways to help residents and potential buyers understand these differences so that everyone is protected if the unexpected should happen. Being well-informed is the best defence against the unexpected.

Ryan Michel has worked in the insurance industry since 1996. He is currently vice-president and chief risk officer of enterprise risk management with Allstate Canada.