Insurance is important because it protects a person or entity from extreme financial loss or responsibility due to an unfortunate emergency, accident or negative unforeseen event. There are many different kinds of insurance, some of which cover a person and some of which cover businesses and other entities.
When it comes to condominium buildings, there are three major types of insurance: condo corporation insurance, condo owners insurance, and renters insurance. In this blog post, we will give a brief overview of each so that we can better understand the importance of and differences between them.
Condo Corporation Insurance
Following construction, once the condominium corporation has assumed ownership of the common elements, certain legislative requirements are imposed on the condominium corporation with respect to insurance. The Condominium Act creates a two-part insurance regime, which requires the condominium corporation to have two types of coverage: Property insurance, which provides coverage in respect of damage to the units and the common elements caused by major perils; and liability insurance.
In Alberta, a condominium corporation is required to obtain and maintain insurance for both itself and on behalf of the unit owners in respect of damage to the units and common elements caused by “major perils.” The major perils referenced in the Condominium Act are as follows: fire, lightning, smoke, windstorm, explosion, water escape, strikes, riots or civil commotion, vandalism or malicious acts.
A condominium corporation is also required to obtain and maintain liability insurance which insures against its liability resulting from a breach of duty as occupier of the common elements or land the corporation holds as an asset; arising from ownership, use or operation of boilers, machinery, and pressure vessels, and motor vehicles. Condominium corporations generally purchase commercial general liability policies.
Condo Owners Insurance
The Condominium Act of Alberta mandates that each condo corporation “obtain and maintain” insurance in the event of “damage to the units and common elements that is caused by major perils” or other perils specified in the declaration and by-laws. Obviously, a condo that includes a marina, extensive grounds, or a rooftop party room will contain a somewhat more extensive coverage than other condos.
The perils that most commonly occur in condos are water escape in terms of leaks, overflows, and pipes bursting, vandalism, and fire/smoke. Damage from drain and sewer backups should also be included. In addition to perils, the condo insurance covers liabilities for injuries caused by accidents and acts of omission and commission in common elements.
Finally, the insurance carries liability for directors in the event that owners, tenants, guests, employees, or even contractors sue them and insurance companies as a result of their duties on the board. The insurance will cover them, however, only to the extent that they had done due diligence and acted in good faith while carrying their duties.
As well, when a pipe bursts in the common elements and damages a suite or an owner’s locker, the condo insurance will pay for the repairs if the cost is above the deductible. Similarly, water damage from a suite to another below or adjacent has to be covered by the condo’s insurance or the responsible suite owner.
Condo Renters Insurance
Even if you don’t own a home, unexpected events may arise. While you may not always be able to prevent certain situations, such as a break-in or visitor’s injury, you may be able to help minimize the impact. Whether you’re renting a single-family home or an condominium, renters insurance may help protect you in important ways.
Think of everything you own. The value of your belongings can quickly add up. Personal property coverage, a typical component of renters insurance, may help cover the cost of replacing your stuff if it’s unexpectedly damaged or ruined. That protection generally applies to certain risks (also referred to as "perils"), such as fire and theft.
So, if your computer and television are stolen, or a fire destroys your furniture and clothing, this coverage may help you pay for the cost of replacing them. It’s important to know that coverage limits — the maximum amount your policy will pay for personal property losses — will apply.
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Braden Equities Inc. has been successfully managing condominium buildings in Edmonton since the 1970s. A lot has changed since then, but our commitment to the residents living in each building we manage has not. Contact us today.