Required Perils Insurance
According to the Condominium Property Regulation, condominium corporations must maintain insurance against the following perils:
Peril | Description |
Fire | Damage caused by flames, heat, and smoke |
Leakage from Fire Protective Equipment | Damage caused by sprinkler systems, fire suppression systems, or firefighting efforts |
Lightning | Damage caused by direct lightning strikes or electrical surges |
Smoke | Damage from excessive smoke, even if no fire occurs |
Windstorm | Damage caused by strong winds, hurricanes, or tornadoes |
Hail | Damage from large hailstones |
Explosion (Natural, Coal, or Manufactured Gas) | Damage from accidental gas explosions |
Water Damage - Flooding | Damage from external sources such as river overflow, heavy rain, or flash flooding |
Water Damage - Sewer Backup & Plumbing Failures | Damage caused by sudden and accidental escape of water from plumbing, heating, sprinkler, or air conditioning systems |
Impact by Aircraft, Spacecraft, Watercraft, or Land Vehicles | Damage caused by accidental collisions |
Riot, Vandalism, or Malicious Acts | Damage caused by civil disturbances or intentional property destruction |
Additional Perils Required by Bylaws | Any perils specifically outlined in the condominium corporation’s bylaws |
Peril | Coverage Requirement |
Fire | Required for all condominium corporations |
Leakage from Fire Protective Equipment | Protects against accidental or emergency water damage from fire protection systems |
Lightning | Protects against electrical system damage and structural fires caused by lightning |
Smoke | Smoke damage can impact walls, ceilings, HVAC systems, and personal property |
Windstorm | Protects against roof damage, window breakage, and debris impacts |
Hail | Common in Alberta, hail can cause roof and exterior damage |
Explosion (Natural, Coal, or Manufactured Gas) | Protects against structural destruction, fire, and personal injury |
Water Damage - Flooding | Required unless flood insurance is unavailable or prohibitively expensive |
Water Damage - Sewer Backup & Plumbing Failures | One of the most common causes of insurance claims in condominiums |
Impact by Aircraft, Spacecraft, Watercraft, or Land Vehicles | Protects against building damage from vehicles, planes, or boats |
Riot, Vandalism, or Malicious Acts | Excludes damage caused by unit owners, occupants, or tenants to their own units |
Additional Perils Required by Bylaws | Boards may choose to expand required coverage |
Special Note for Bare Land Condominiums:
For bare land units, the corporation must insure against only those perils applicable to the property they are responsible for, unless their bylaws require broader coverage.
Best Practices for Insurance Management
Regular Policy Reviews: Ensure that coverage aligns with CPA requirements and rising replacement costs.
Risk Assessments: Conduct building inspections to identify potential hazards and reduce claims.
Board Education: Ensure board members understand their insurance responsibilities and legal obligations.
Strategies for Selecting the Best Insurance Policy
Every condominium corporation has unique needs based on building size, age, amenities, and risk factors. A well-chosen policy protects against financial risks while staying cost-effective.
Factors to Consider When Selecting an Insurance Policy
Policy Limits & Exclusions: Ensure coverage is adequate for the full replacement value and meets CPA requirements.
Deductibles: Higher deductibles lower premiums, but may shift costs to unit owners in case of claims.
Broker vs. Direct Insurance: A specialized broker understands CPA requirements and can find the best policy.
Loss History: Frequent claims increase premiums. A proactive risk management strategy reduces costs over time.
Common Pitfalls to Avoid
Assuming all policies meet CPA requirements. Not all insurance products align with legal mandates.
Overlooking policy exclusions. Ensure perils such as flooding and sewer backup are covered.
Failing to compare multiple quotes. The cheapest policy may lack critical protections.
Recommended Best Practice
Condominium managers should recommend that boards consult an insurance professional familiar with CPA regulations and Schedule 2 investment rules to ensure compliance.
Ways to Reduce Premiums Without Compromising Coverage
Insurance premiums for condominium corporations have been rising due to increased claims, higher rebuilding costs, and liability risks. However, there are legal and strategic ways to control costs while maintaining adequate protection.
Cost-Saving Strategies
Increase Deductibles: Raising deductibles lowers premiums, but boards must ensure owners understand potential cost implications.
Risk Mitigation Programs: Implementing fire suppression systems, security cameras, and regular maintenance can lower premiums.
Bundle Policies: Some insurers offer discounts for combining multiple coverage types, such as property and liability insurance.
Regular Market Comparisons: Seek new quotes every 1-3 years to ensure competitive pricing.
Balancing Cost vs. Coverage
While reducing premiums is important, condominium boards must avoid being underinsured. A poorly structured policy could lead to large financial liabilities in case of a loss.
