What Insurance Must an Ontario Condo Corporation Carry?

If you own a condo, the building has its own insurance, and it is easy to assume that policy covers everything inside your unit. In practice, the corporation's policy and your own responsibilities meet at a line that is set by your building's documents.

This article explains what the corporation must insure under Ontario law, what usually falls to you, and how to find out where the line sits in your building.

What the corporation must insure

The law requires a condo corporation to carry insurance and never let it lapse. The coverage it must have includes the following kinds.

• Damage to units and common elements (s. 99).
• Liability for failing to keep common areas safe or from using machinery (s. 102).
• Directors' and officers' liability (s. 39).

Directors' and officers' insurance does not cover directors who do not act in good faith.

The standard unit: where the corporation's policy stops

The corporation's property insurance does not cover improvements or non-standard elements of units. Fixtures, furnishings, equipment and personal property are generally not part of a 'standard unit', which each corporation defines in its governing documents.

The same definition decides who repairs damage. The corporation repairs damage to the standard unit as defined in its governing documents, and owners must repair everything outside that definition, however the damage was caused. Because each building defines its standard unit differently, two neighbouring buildings can draw the line in different places.

In practice, this means an upgrade you made, such as new flooring or custom cabinets, may or may not fall inside your building's definition. How it applies to you depends on your documents, so it is worth confirming with the corporation or a lawyer.

Do owners and tenants have to carry insurance?

No statute is cited as requiring unit owners to carry their own insurance. Even so, owners are encouraged to strongly consider property insurance for upgrades, fixtures, furnishings, equipment and personal property, and possibly legal expense insurance.

A corporation's declaration, by-laws or rules may require owners to carry insurance, and then it is mandatory for that building. Tenants are not legally required to carry tenant insurance, unless the tenancy agreement or the corporation's governing documents require it.

Deductibles and damage caused by an owner

When damage is caused by an owner, tenant or resident, s. 105(2) lets the corporation charge the owner the lesser of the repair cost or the corporation's insurance deductible.

Some corporations have by-laws that make owners pay the corporation's deductible in more situations, including where no one is directly at fault. Owners exposed to this may need their own coverage for it, often called deductible or loss assessment coverage. Deductibles can range from a few hundred dollars to tens of thousands.

Because these by-laws differ from one building to the next, it helps to read yours closely and ask an insurance broker whether your own policy would respond if you were charged a deductible.

Which document wins if they disagree

Ontario condos are governed in this order: the Condo Act, then the declaration, then the by-laws, then the rules. If they conflict, the Act takes priority. So a by-law cannot reduce the insurance the Act requires.

What to do next

• Read your declaration and by-laws for the definition of a standard unit.
• Ask the corporation for a copy of its insurance certificate.
• Check whether your building requires owners to carry insurance.
• Look for any by-law that passes the corporation's deductible on to owners.
• List upgrades and belongings, and ask an insurance broker what your own policy should cover.
• Ask a lawyer if you disagree with the corporation about who must repair or insure something.

Frequently asked questions