It is crucial for Calgary condo managers and condo board members to understand legislation regarding insurance deductibles and the implications they hold for unit owners.
Subject to the corporation bylaws, owners are considered "absolutely liable" for paying the condo corporation insurance deductible in cases where damage originates from their unit or exclusive use area. Absolute liability refers to the fact that negligence does not need to be proven for an owner to be responsible for damage. Under absolute liability, the owner is found liable regardless of whether or not they are found negligent.
An example where an owner would be absolutely liable for damage to the common property would be when their washing machine supply line fails and water leaks into units below. Because the supply line is equipment owned by the unit owner and only used for their enjoyment, they are absolutely liable, up to the insurance deductible for any damage when it fails.
An example where an owner is not absolutely liable for the insurance deductible is an owner that crashes into the parkade overhead door with their vehicle - because the damage didn’t originate from their unit or exclusive use areas then the owner is not absolutely liable. However, in this example the owner was still negligent and so the corporation may chargeback actual costs to the owner by applying for a court order.
It is important for condo board members to recognize that owners are not liable for the insurance deductible if the damage resulted from a defect in the construction of their unit or exclusive use area. Additionally, owners are not responsible if the damage can be attributed to an act or omission of the corporation or normal structural deterioration of the common property, unless the owner was required in the bylaws to maintain the property that caused the damage. Legislation does put a $50,000 limit on the insurance deductible chargeback, so even if the insurance deductible is, say, $100,000, the most an owner is absolutely liable for is either the insurance deductible or $50,000, whichever is lower.
Condo lawyers commonly advise that the corporation bylaws must explicitly state that the corporation has the ability to charge back the insurance deductible to owners. This requirement helps establish a transparent system where owners are fully aware of their obligations and facilitates the fair distribution of liability within the corporation. Arguably, if your bylaws do not state that the corporation can chargeback the insurance deductible, then the corporation can still chargeback to a unit for actual costs, but the corporation would have to prove the owner's negligence caused the damage.
Note that there are other considerations when charging back the insurance deductible to an owner. For example, the board must approve the chargeback and all other legislated requirements regarding chargebacks must be actioned for the chargeback to be considered valid. You are welcome to reach out to Key Condo’s team for more information about how insurance deductibles should be administered by the condo manager and condo board.
Thanks for creating more awareness on this topic!
As a retired Condomimium Property Management company owner and Property Manager I still amazed how everyone thinks its ok for the unit owner to simply pay the condo deductible rather than having their own insurance pay any claim related to damage they cause by accident, or lack of maintenance, extending to property damaged beyond the unit where loss occurred. Eventhough the condo Corp recovers the deductible, the loss history remains with the condo Corp which drives the insurance rates. Rates will continue to rise for condo Corp insurance premiums until condo insurers see less exposure to risk.
Hey Dana,
Great Article. Did the recent change to the Condo Property Act of Alberta remove the $50K limitation that can be charged to the unit owner?