Responsibilities of the Condominium Board in Securing and Maintaining Insurance
Under the Condominium Property Act (CPA) and Condominium Property Regulation (CPR), a condominium corporation is legally required to obtain and maintain adequate insurance to protect the corporation, common property, and unit owners.
Mandatory Insurance Requirements
A condominium corporation must maintain insurance coverage for:
Common Property & Units – Covers all condominium property that is not part of a unit owner’s personal belongings or upgrades.
Liability Insurance – Protects the corporation against claims of bodily injury or property damage.
Crime Coverage – Provides protection against fraud, theft, and dishonest acts.
Directors & Officers (D&O) Liability Insurance – Protects board members from personal liability related to their duties.
Additional Coverages as Required by Bylaws – Some condominium corporations may have bylaws that require additional insurance coverage.
The board must annually review insurance policies to ensure they meet legal requirements and align with the corporation’s risks.
The Condominium Property Act requires a corporation to maintain insurance on the units and common property, as well as liability coverage.
The Corporation’s Responsibility for Insuring the Standard Insurable Unit Description (SIUD)
What is the SIUD?
The Standard Insurable Unit Description (SIUD) is a registered document with Land Titles that outlines the components of a typical unit that the condominium corporation must insure. This includes:
Walls, flooring, and ceilings
Built-in cabinetry and countertops
Standard plumbing and electrical fixtures
Any other components specified in the SIUD
Who Pays for Damage?
In the case of an insurable loss, the condominium corporation must:
Repair or replace the damaged components as outlined in the SIUD—regardless of who caused the damage.
Charge back up to $50,000 to the responsible unit owner if the damage originated from their unit (per the Condominium Property Regulation).
This means that even if the damage was caused by another resident, visitor, or tenant, the corporation must first handle the repairs and later recover costs from the responsible unit owner.
Reporting and Documentation Requirements
Insurance Reporting to Unit Owners
The condominium board must:
Provide unit owners with a copy of the insurance certificate annually or upon request.
Notify unit owners of any changes to insurance coverage within 30 days of the change taking effect.
Ensure insurance coverage aligns with the reserve fund and financial planning requirements of the corporation.
Required Insurance Documentation
Condominium corporations must keep detailed insurance records, including:
Insurance Policies & Coverage Limits
Certificates of Insurance
Claims History & Outstanding Claims
Board Meeting Minutes Reflecting Insurance Decisions
Proper documentation ensures compliance with legal obligations and provides transparency to unit owners.
Risks and Consequences of Inadequate Insurance Coverage
Potential Risks of Insufficient Insurance
Financial Risk – If coverage limits are too low, the corporation may not have enough funds to cover damages, leading to special levies on unit owners.
Legal Liability – Without proper liability insurance, the corporation and board members could face lawsuits for damages or injuries.
Non-Compliance Fines – Failure to carry mandatory insurance may result in regulatory penalties.
Higher Future Premiums – Insufficient coverage can result in higher insurance costs or difficulty obtaining coverage in the future.
Case Example: The Impact of Inadequate Coverage
A condominium corporation carries insurance with a low deductible and inadequate liability coverage. A fire damages multiple units and common property, but the policy does not cover the full repair costs. The result:
The board must issue a special levy to owners.
Several unit owners dispute the levy, leading to legal action.
The condominium’s insurance provider increases premiums significantly at renewal.
Proper insurance planning can help avoid these risks and protect both the corporation and owners from financial hardship.
