Understanding Different Types of Condominium Insurance Policies
The Condominium Property Act (CPA) and Condominium Property Regulation (CPR) establish mandatory insurance requirements for condominium corporations. Properly structured insurance policies help protect common property, unit owners, and the corporation itself from financial risk.
Types of Insurance Policies
Type of Insurance | Purpose |
Property Insurance | Covers common property and insured unit components against risks like fire, storm damage, and flooding. |
Liability Insurance | Protects the corporation from claims related to bodily injury or property damage on common property. |
Directors & Officers (D&O) Insurance | Protects board members from legal action arising from decisions made in their capacity as directors. |
Crime Insurance | Covers losses from fraud, theft, or dishonesty by employees or board members. |
Type of Insurance | Coverage Requirements |
Property Insurance | Must be based on replacement cost and cover standard insurable unit descriptions (SIUD) as registered with Land Titles. |
Liability Insurance | Required under CPA; should include third-party liability coverage. |
Directors & Officers (D&O) Insurance | Mandatory under the CPA to protect directors of the corporation. |
Crime Insurance | Mandatory under CPA to prevent financial loss. |
The CPA requires condominium corporations to maintain insurance for common property and units.
Analyzing Insurance Policies for Coverage Gaps
Not all insurance policies meet the full requirements of the CPA, and gaps in coverage can lead to unexpected financial losses.
Common Coverage Gaps
Insufficient Deductible Coverage: Some policies may not provide enough coverage for high deductibles, leading to large out-of-pocket costs for unit owners.
Exclusions on Perils: Some policies exclude specific risks, such as sewer backups, earthquake, or water infiltration.
Limited Crime Insurance Coverage: The CPA mandates crime coverage, but some policies do not cover employee theft or fraud adequately.
How to Identify Coverage Gaps
Review the policy’s exclusions and endorsements.
Compare the coverage amounts with CPA requirements.
Check deductible obligations to ensure they align with corporation bylaws.
Evaluating Insurance Deductibles and Policy Limits
A deductible is the amount that must be paid before an insurance claim is processed. The CPA allows corporations to charge back deductible costs to unit owners in certain cases.
Impact of High Deductibles
Lower insurance premiums, but higher financial burden in the event of a claim.
Unit owners may be liable for up to $50,000 in damages if the loss originates from their unit (Condominium Property Regulation).
Determining Policy Limits
Policy limits should be based on full replacement cost for the insured property.
The corporation must insure any property described in the registered SIUD, regardless of who caused the damage.
Boards should ensure crime coverage meets CPA minimums to protect against fraud and theft.
