A condominium corporation is required to maintain insurance to protect common property and condominium units (in conventional condominiums) against loss resulting from destruction or damage. The condo corporation must also maintain insurance against liabilities incurred by board members and the corporation itself in carrying out their duties.
Tip for owners and board members: Insurance is a complex topic. To learn more, go to the Insurance Bureau of Canada for further information.
The condominium corporation must place and maintain insurance in the amount of the replacement value of the insured property. A corporation is required to maintain insurance to protect common property against loss resulting from destruction or damage caused by:
- Fire and/or leakage from fire protective equipment;
- Explosion of natural, coal or manufactured gas;
- Water damage caused by flood;
- Water damage caused by sewer back-up or the sudden and accidental escape of water or steam from within a plumbing, heating, sprinkler or air conditioning system or a domestic appliance that is located within an insured building;
- Impact by aircraft, spacecraft, watercraft and land vehicles;
- Riot, vandalism or malicious acts; and
- Any other causes as required by the condominium by-laws.
For bare land condominium units, condo corporations must maintain insurance on common property against loss resulting from destruction or damage caused by the perils listed above.
Tip for condo boards: Condominium corporations can maintain insurance on units and/or common property against additional perils other than the ones required by law. Check with your insurance representative and/or lawyer to determine the appropriate amount of insurance coverage for you.
In a conventional condominium, a corporation is also required to maintain insurance on the condominium units, except for any improvements made to the units by the owners. Improvements may include:
- renovations that have been done by owners after the unit was built
- builder upgrades that were included in the original unit
- anything defined as an improvement by the condominium’s bylaws.
If required by the bylaws, the corporation must also maintain insurance on improvements made to units.
A corporation also has to maintain insurance to protect itself from any liabilities incurred by board members and the corporation itself when they are carrying out their duties and responsibilities. The insurance, however, does not extend to liability incurred by board members when they fail to:
- Act honestly and in good faith
- Exercise care, diligence and skill to the reasonable person standard
To learn more about these standards of conduct, go to the Condo board conduct page.
Tip for condo boards: Check the condo corporation’s bylaws regarding insurance and ensure you obtain the advice of an insurance representative and/or lawyer to determine the appropriate amount of insurance coverage for you.
Personal Home Insurance
The corporation’s insurance does not protect your personal possessions or liability. You should always buy homeowner’s insurance to cover your personal possessions and liability. Unless the bylaws say otherwise, your condominium corporation’s insurance will not cover improvements made to your unit. An insurance broker will be able to review the condominium corporation’s insurance policy and advise you about what type of condominium homeowner’s insurance is best for your situation.
What happens if a condo corporation and owner place insurance on the same loss?
If a condo corporation and owner both place insurance against a loss resulting from destruction of/damage to units or the common property, then the corporation’s insurance is considered first loss insurance. The owner’s insurance is considered excess insurance.
Tip for condo boards and owners: If you have questions about first loss or excess insurance and how it applies to your situation, ask your insurer. If a dispute arises over insurance coverage, you should seek legal advice.
What is an insurance deductible?
An insurance deductible is money that must be paid to the insurer before the insurer will pay out any expenses for a claim. Some condominium corporations will have bylaws stating who will be responsible for paying the deductible for damage caused to the common property.
Tip for condo owners: Some insurance companies offer owners deductible coverage that will help pay for the corporation’s deductible if the owner is responsible for paying it. Check with your insurance representative to discuss this type of coverage.
What happens when there are insurance coverage changes?
When there is a change to insurance coverage (e.g., the deductible amount, replacement value of coverage or permitted exclusion additions), a corporation must provide owners with written notice of the change. Within 30 days of receiving the insurance certificate reflecting the changes, the corporation must provide a copy of the certificate to owners.
The Condominium Property Amendment Act will bring in new condominium insurance rules. This website will be updated when the new rules come into force.
Last updated: February 2018