Condo Corporation Insurance Ontario: What the Master Policy Covers

Many owners assume the corporation's insurance means their unit is fully protected, and then discover after a leak or fire that part of the loss is theirs.

This article explains what the corporation must insure, how the standard unit definition draws the line, and where gaps tend to land on owners.

What the corporation must insure

Condo corporations must maintain insurance and keep their policies from lapsing. The required cover includes:

• Damage to units and common elements, under section 99 of the Act.
• Liability for breach of the duty to keep common areas safe or from using machinery, under section 102.
• Directors and officers, under section 39.

Corporations must be insured against major perils including fire and water leaks. Property insurance is often called the master policy, though the labels in your building's documents may vary.

The standard unit: where coverage stops

The corporation's property insurance does not cover improvements or non-standard elements of units. Anything outside the standard unit definition is an improvement, and the owner is responsible for insuring and repairing it.

The governing documents define the standard unit, and standard unit definitions generally exclude alterations or renovations. A corporation with no standard unit by-law must use the declarant's standard unit definition schedule.

These are general guides. The answer for your unit depends on how your building defines the standard unit, so check that document.

Repairs and who does them

Corporations are generally responsible for repairing damage to common elements and standard unit elements. Section 90 sets how maintenance obligations are divided, and governing documents can alter them.

This is why your declaration matters. Two buildings can divide repair duties differently, and the same damage may be the corporation's job in one building and partly yours in another.

Where the gaps land on owners

• Improvements and upgrades to your unit, which you insure and repair yourself.
• Personal belongings and furnishings, which are generally outside the standard unit.
• Deductibles, which owners are generally responsible for in their own claims, and which by-laws can extend to the corporation's deductible, including where no one is at fault.
• Damage you, a tenant or a resident cause, where the corporation must charge back the lesser of the repair cost and its insurance deductible.

Deductibles can range from a few hundred dollars to tens of thousands. When an owner and the corporation both claim for the same damage, each usually pays its own deductible.

The CAO advises owners to take out their own property insurance, including cover for unit upgrades, personal belongings and non-standard parts of the unit. Liability for a leak from one unit into another depends on the declaration, the Act and general law, so a serious dispute is worth taking to a lawyer.

Deductibles and chargebacks in more detail

A deductible is the part of a loss that insurance does not pay. In a condo, who bears it can matter as much as who is insured, so it helps to see the usual patterns side by side.

If you disagree with a chargeback, where the dispute goes depends on the underlying issue. The Condominium Authority Tribunal handles chargebacks only where the underlying issue is within its jurisdiction, such as nuisance, parking, pets or condo records. Most repair and damage chargebacks go to mediation, arbitration or the Superior Court of Justice.

Compliance costs such as legal letters cannot be charged back without Tribunal or court permission.

Insurance is not the only way a loss can reach your wallet. A budget shortfall, such as an unforeseen repair, can force the corporation to levy a one-time special assessment. Special assessments are shared by owners in the same percentages used for common expenses, and owners must pay their portion.

What to do next

• Request the declaration, by-laws and standard unit definition from the corporation.
• Compare that definition to what is actually in your unit, noting flooring, appliances and renovations.
• Ask the corporation or your property manager for proof of the corporation's insurance and the current deductible.
• Check whether your by-laws extend owner responsibility for the deductible.
• If you are buying, consider a status certificate, which shows the budget, a statement on the reserve fund and any legal issues.
• Review your own policy with a broker so it fits the gaps you identified.

If you are unsure whether a loss is the corporation's responsibility or yours, get advice before you pay or sign anything.

Frequently asked questions