Imagine this:
The dishwasher in your Ottawa condo leaks while you're out.
Water damages your flooring, runs into the unit below and reaches part of the hallway.
Who pays?
Your insurance company?
The condo corporation?
The neighbour downstairs?
You?
The answer can potentially involve more than one of them.
Condo insurance is one of those things that seems straightforward until something actually goes wrong. The building has insurance, you have insurance, and yet there can still be deductibles, exclusions and questions about who is responsible for what.
If you're buying a condo in Ontario, there's one term in particular worth understanding:
the standard unit.
Your Condo Corporation Has Insurance. That Doesn't Mean Everything Inside Your Unit Is Covered.
Ontario condominium corporations are required to maintain insurance protecting the corporation against certain types of damage and liability. That includes insurance covering the condominium's units and common elements against specified risks.
But the corporation's policy isn't designed to replace everything you own inside your condo.
According to the Condominium Authority of Ontario, the corporation's property insurance generally does not cover improvements or non-standard elements within individual units. Owners should therefore understand how their corporation defines a standard unit and arrange their own coverage for things outside that definition.
That's where things get interesting.
What Is a "Standard Unit"?
A standard unit is essentially the version of your condo that the corporation considers its insurance responsibility for repair purposes.
The exact definition can vary from one condominium corporation to another.
Ontario condo corporations can establish their definition of a standard unit through their bylaws.
For example, imagine you purchase a condo with beautiful engineered hardwood flooring.
If the corporation's standard unit definition includes only basic flooring, your upgraded hardwood may fall outside what the corporation's insurance would restore after insured damage.
The same issue can potentially arise with upgraded:
flooring
cabinetry
countertops
fixtures
built-ins
other renovations or improvements
This is why "the building has insurance" isn't enough information on its own.
You need to know what that insurance considers the original or standard unit.
A Renovated Condo Can Make This Even More Important
Picture two identical units in the same building.
Unit 501 still has most of its original finishes.
Unit 502 has been renovated with custom cabinetry, stone countertops, upgraded flooring and expensive built-ins.
The corporation's standard unit definition might be identical for both condos.
That means the owner of Unit 502 may need considerably more personal insurance coverage to protect the value of those upgrades.
The CAO recommends that owners carry their own insurance for their personal property and unit upgrades or changes that aren't covered by the condominium corporation's policy.
So when you're buying a beautifully renovated resale condo, the upgrades aren't just something to admire during the showing.
They're also something to mention when arranging your insurance.
Then There Are Insurance Deductibles
This is another part of condo ownership that buyers don't always think about.
An insurance deductible is the amount that must be paid before an insurer pays the covered portion of a claim.
The CAO notes that condo insurance deductibles can range from hundreds to tens of thousands of dollars, depending on the policy.
Normally, an owner and the condominium corporation are responsible for their respective deductibles when both make insurance claims.
But there are circumstances where an owner may become responsible for some or all of the condominium corporation's deductible as well.
Wait. You Could Have to Pay the Building's Deductible?
Potentially.
Ontario's condominium rules allow certain damage-related costs to be charged back to an owner. The Condominium Authority of Ontario explains that where damage is caused by an owner, tenant or resident, the owner may be charged the cost of the repair or the corporation's insurance deductible limit, whichever is less, in circumstances covered by the Condominium Act.
A condominium corporation's governing documents can also establish additional circumstances where an owner may be responsible for costs.
For example, the CAO notes that some condo bylaws extend deductible responsibility to circumstances where nobody is necessarily directly at fault.
That's an important detail.
It means the question isn't simply:
"Did I personally cause the damage?"
You also need to understand the corporation's governing documents and insurance arrangements.
Let's Use a Hypothetical Example
Suppose a pipe or appliance connected to your unit causes a major water loss.
Your flooring is damaged.
The hallway is damaged.
The condo below you is damaged.
There could potentially be several layers of insurance involved:
Your personal condo policy may respond to your belongings, improvements and other coverage included in your policy.
The condominium corporation's policy may respond to insured damage involving standard units and common elements.
Another owner's insurer may also become involved depending on the circumstances.
And then the question of deductibles and responsibility still has to be resolved.
Exactly how a real claim would be handled depends on the policies, governing documents and circumstances of the loss, so buyers and owners should speak with their insurer or insurance broker about their specific coverage.
This Is Why Condo Insurance Isn't Just "Contents Insurance"
When people first move from renting into condo ownership, it's easy to think:
"I don't own that much stuff. Why would I need much insurance?"
But personal condo insurance can address much more than replacing your television and furniture.
The CAO specifically recommends that owners consider coverage for personal property, unit improvements and liability, as well as protection for situations where they may become responsible for the condominium corporation's deductible.
The exact coverage available depends on the insurer and policy, but it's worth having that conversation before something happens rather than after.
What Should Ottawa Condo Buyers Look For?
You don't need to become an insurance expert before buying a condo.
You should, however, know enough to ask the right questions.
Before closing, it's worth understanding:
What is the corporation's standard unit definition?
This helps establish what the corporation considers part of the insured standard unit versus an owner improvement.
What are the corporation's insurance deductibles?
Particularly for major risks such as water damage, knowing the deductible can help inform the coverage you arrange personally.
Does the corporation have an insurance deductible bylaw?
Some bylaws can affect the circumstances in which owners become responsible for the corporation's deductible.
Has the unit been significantly renovated?
If so, tell your insurance provider. You may need coverage reflecting the value of those improvements.
Does your own policy include appropriate deductible assessment or similar protection?
Ask your insurance broker specifically how your policy responds if the condominium corporation charges you for one of its deductibles.
Can You Find This Information Before Buying?
Much of the relevant information can be found within the condominium corporation's documentation.
For a resale condo purchase, this is another reason the status certificate package and governing documents deserve more attention than many buyers initially give them.
Your lawyer can review the legal documentation, while your insurance provider or broker can explain how the corporation's insurance arrangements interact with the personal condo policy you're considering.
Those are different jobs, and both can matter.
The Bigger Lesson: With Condos, You Own More Than Four Walls
One of the recurring themes of condo ownership is that your individual unit and the larger corporation are financially connected.
That's true when you're talking about reserve funds.
It's true when you're talking about condo fees.
And it's true when you're talking about insurance.
The question isn't simply whether a condo building is insured.
The better questions are:
What does the corporation insure?
What are you expected to insure?
And what could you potentially be responsible for if something goes wrong?
You don't need those answers because you expect your condo to flood.
You need them so that if it ever does, the financial side of the problem isn't the biggest surprise.
Buying a Condo in Ottawa?
Buying a condo means evaluating more than the unit itself.
The New Purveyors team helps Ottawa condo buyers understand the building, documentation, fees and other details that can have a meaningful impact on ownership after closing.
If you're considering a condo in Ottawa, get in touch with New Purveyors and we'll help you know what to investigate before you buy.
