One of the more confusing parts of condo ownership is insurance.
You pay condo fees. The condo corporation carries insurance on the building. So it would be reasonable to assume that if something happens inside your unit, the building’s insurance takes care of it.
Not quite.
In Ontario, there can be a significant difference between what the condominium corporation insures and what you, as the unit owner, are responsible for protecting yourself.
And the dividing line is not necessarily the drywall.
It can come down to something called the standard unit definition.
If you’re buying a condo, this is one of those details that sounds boring until a pipe bursts.
Yes, the Condo Corporation Has Insurance
Under Ontario’s Condominium Act, condo corporations are required to maintain property insurance covering the units and common elements against specified major perils, subject to the terms of the legislation and the corporation’s policy.
The corporation also carries liability insurance relating to the common elements.
That could include parts of the property such as:
hallways
elevators
lobbies
parking garages
recreational facilities
mechanical systems
other common elements
The corporation’s property insurance can also extend into the individual condo units.
This is where things get more complicated.
Meet the “Standard Unit”
Every condo owner should understand this term.
The standard unit definition essentially establishes what components of an individual unit are treated as the original or standard unit for insurance and repair-after-damage purposes.
A condominium corporation can define its standard unit through a by-law.
Why does that matter?
Because the Condominium Act specifically excludes improvements made to a unit from the corporation’s obligation to insure, and whether something is considered an improvement is determined by reference to the standard unit.
So imagine two condos that look almost identical today.
One building’s standard unit definition might include certain flooring, cabinetry or fixtures.
Another corporation may define its standard unit differently.
That means you can't necessarily assume the corporation’s insurance covers the same things just because both properties are condos.
What Happens If You've Renovated Your Condo?
This is where the distinction becomes much easier to understand.
Imagine the original unit came with basic laminate flooring, but a previous owner installed expensive hardwood.
If the corporation’s standard unit definition treats the original flooring as part of the standard unit, the upgraded hardwood may be considered an improvement.
The corporation’s insurance obligation does not extend to owner improvements under section 99 of the Condominium Act.
That is one reason the Condominium Authority of Ontario recommends that owners carry their own insurance for personal belongings and upgrades or changes made to their units.
The same issue can potentially arise with things like:
upgraded flooring
renovated kitchens
custom cabinetry
upgraded bathroom finishes
built-in features
other alterations beyond the standard unit
Exactly what is considered standard versus improved depends on the particular condominium’s documents.
Your Furniture Isn't the Condo Corporation's Problem Either
The corporation's insurance isn't a substitute for contents insurance.
Your couch.
Your television.
Your computer.
Your clothing.
Your furniture.
Your personal belongings.
The CAO recommends that unit owners maintain their own separate insurance for their personal possessions, as well as appropriate liability coverage.
So if water damage affects both the building and everything inside your unit, there can potentially be multiple insurance issues happening at the same time.
The corporation may have a claim.
You may have your own claim.
And the two policies don't necessarily cover the same things.
Then There Are Condo Insurance Deductibles
This is where condo insurance gets particularly important for owners.
Every insurance policy has limits and deductibles.
A condo corporation might have a deductible that is considerably larger than the deductible on your personal condo insurance policy. The CAO notes that corporate insurance deductibles can range from relatively small amounts into the tens of thousands of dollars depending on the policy.
Normally, a corporation’s deductible is treated as a common expense.
However, Ontario's Condominium Act allows certain insurance deductible amounts to be charged to an individual unit owner in particular circumstances. The amount is generally limited to the lesser of the cost of repairing the damage or the corporation's insurance deductible.
Condominium corporations may also have by-laws that extend the circumstances in which an owner can become responsible for the corporation’s deductible.
That is an important detail to know before something goes wrong.
Here's a Simple Example
Imagine the washing machine in your condo leaks.
Water damages your flooring, enters the unit below and affects part of the common elements.
Suddenly several questions need to be answered:
What caused the leak?
Which portions of the damage fall within the condo corporation's insurance?
Which parts of your own unit are considered improvements?
Was any of your personal property damaged?
What is the corporation's insurance deductible?
Does the condominium have a deductible by-law that applies?
Does your own condo insurance cover you if the corporation charges that deductible back to your unit?
This is why “the building has insurance” isn't enough information.
There are multiple layers.
How Big Is the Building's Deductible?
This is worth checking.
Let's say a building has a significant water-damage deductible.
That does not necessarily mean every owner is personally responsible for that entire amount whenever water appears in their unit.
But it does mean we would want to understand the corporation’s insurance arrangements, governing documents and deductible provisions.
The CAO specifically recommends that owners speak with their insurance broker about coverage for situations where they may become responsible for the condominium corporation's deductible.
This coverage may be referred to by insurers using terms such as deductible assessment or loss assessment coverage, although terminology and coverage vary by insurer and policy.
Don't simply assume your policy contains enough of it.
Ask.
Where Can Buyers Find the Condo Corporation's Insurance Information?
This is another reason the status certificate matters.
For a resale condo in Ontario, the status certificate package contains significant information about both the unit and condominium corporation.
According to the Condominium Authority of Ontario, a status certificate includes a certificate of insurance for the corporation's current insurance policies, along with other important financial and legal information.
The package also normally includes the corporation's governing documents.
That gives your lawyer an opportunity to review things such as:
the corporation's insurance information
relevant deductible amounts
the declaration
applicable by-laws
the standard unit definition
provisions that could affect an owner's responsibility
The CAO recommends that prospective resale buyers have their status certificates reviewed with legal counsel.
Don't Just Ask, “How Much Is Condo Insurance?”
When you're getting an insurance quote for a condo you're buying, give your broker enough information to actually assess the property.
Useful questions can include:
Do I have enough coverage for unit improvements?
Especially important if the condo has been substantially renovated.
Am I insured for the corporation's deductible if one is charged back to me?
Your broker can explain whether your proposed policy includes appropriate coverage and what limits apply.
What liability coverage do I have?
The CAO recommends owners maintain liability insurance in case an injury or other covered liability arises within their unit.
What happens if I can't live in the condo after an insured loss?
Ask about additional living expense coverage and the circumstances in which it applies.
Are there limits for expensive personal belongings?
Jewellery, bicycles, electronics, collectibles and other items may need additional attention depending on the policy.
These are questions for your insurance professional, but knowing to ask them is part of being an informed condo buyer.
This Is Also Why Two Similar Condos Can Carry Different Risks
Imagine you're deciding between two Ottawa condos.
Both are two-bedroom units.
Both have similar condo fees.
Both have healthy reserve funds.
Both seem well managed.
But one corporation has a much larger insurance deductible or significantly different insurance-related by-laws.
That doesn't automatically make it a bad building.
It is simply another piece of information worth understanding.
Condo shopping isn't only about comparing square footage and monthly fees.
You're also buying into the financial and legal structure of an entire corporation.
What We'd Want to Know Before Buying
When helping someone evaluate a resale condo, some of the insurance-related questions worth investigating include:
What is included in the standard unit definition?
This helps determine the line between the corporation's insurance responsibilities and owner improvements.
Has the unit been substantially renovated?
More upgrades can mean more property that needs to be appropriately covered by the owner's own policy.
What are the corporation's insurance deductibles?
Pay particular attention to significant deductibles, including those relating to water damage where applicable.
Does the corporation have an insurance deductible by-law?
Understand when an individual owner could potentially be responsible.
Does the status certificate disclose any insurance concerns?
Insurance information is part of the broader financial picture we want to understand.
Has your own insurance broker reviewed what you need?
The corporation's policy and your personal policy need to work alongside each other.
Condo Insurance Is Really About Understanding the Gaps
You don't need to become an insurance expert before buying a condo.
You just need to avoid making one very common assumption:
“My condo fees pay for building insurance, so I'm covered.”
The corporation is insured.
That does not mean everything you own, everything you've upgraded and every potential cost that could be charged to your unit is covered by that policy.
That is what your own insurance and your due diligence are there to address.
Buying a Condo in Ottawa?
A good condo purchase involves looking well beyond the unit itself.
At New Purveyors, we help buyers understand the building they're buying into, review the information available before committing, identify the questions worth asking and make sure the right professionals are involved when legal, financial or insurance expertise is needed.
Because whether you're comparing condo fees, reserve funds, renovations or insurance deductibles, the goal is the same:
know what you're buying before you own it.
