Improvements and Betterments Coverage for Ontario Condo Owners

You are looking at a unit with a new kitchen, upgraded flooring or a finished layout that the original builder never installed. A natural question is whether the condo corporation's insurance would pay to replace all of that after a fire or a water loss.

In general, the answer is no, or at least not all of it. This article explains how the line between the corporation's insurance and yours is drawn, what "improvements and betterments" means in plain words, and what to check before you close.

What "improvements and betterments" means

In condo insurance, improvements and betterments are the upgrades and changes in your unit beyond what the building's standard unit includes. Think of a renovated bathroom, custom cabinetry or higher-end flooring compared with what a typical unit in the building came with.

The CAO explains that anything outside the standard unit definition is an improvement, and the owner is responsible for insuring and repairing it. Standard unit definitions generally exclude alterations or renovations.

What the corporation insures and what you insure

Condo corporations must maintain insurance and keep their policies from lapsing. That includes insurance against damage to units and common elements. The corporation's property insurance, however, does not cover improvements or non-standard elements of units.

The corporation's governing documents define the standard unit. If a corporation has no standard unit by-law, it must use the declarant's standard unit definition schedule. That document, not general assumptions, decides where your unit's features fall.

This table is a general guide. Each building's documents can differ, so a particular item may be treated differently in your corporation.

Why this matters when you buy a renovated unit

A previous owner may have spent a lot on upgrades. If the corporation's policy responds to a loss, it generally responds only for the standard unit and common elements. The extra value the former owner added is typically your risk to insure.

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. Your governing documents may require it. Your mortgage lender may also have requirements, so ask your lender and your insurer.

• Upgrades such as new flooring or appliances are generally owner items.
• Walls, doors and plumbing are generally part of the standard unit.
• If you cause damage to common elements, or a resident does, you may face a chargeback of the lesser of the repair cost and the corporation's deductible.

Questions to ask before you close

Because the standard unit definition varies by building, the most useful step is to see the actual wording. A lawyer reviewing the purchase can help you read it alongside the status certificate. The corporation can charge up to $100 including taxes for a status certificate and must deliver it within 10 days of receiving the request and payment.

• Ask for the standard unit by-law or the declarant's standard unit schedule.
• Get a list of the renovations done to the unit, with approximate costs, if the seller can provide it.
• Ask whether the declaration or by-laws require you to carry your own insurance.
• Show the standard unit definition to an insurance broker and ask how your upgrades would be covered.
• Ask what deductible you may be responsible for, since by-laws can extend owner responsibility for the corporation's deductible.

What to do next

Before closing, collect the status certificate, the declaration and by-laws, and any standard unit schedule. Share them with your lawyer and insurance broker. Ask the broker to price coverage for the upgrades as they stand today, not as they appeared in the original floor plan.

If a loss happens later and the corporation and your insurer disagree about who covers what, get advice early. Disputes over repairs and damage generally do not go to the Condominium Authority Tribunal.

Frequently asked questions