What Does Condo Unit Owner Insurance Cover in Ontario?

Owning a condo means two insurance policies are in play: the one the condo corporation buys for the building, and the one you buy for yourself. Many owners assume the building's policy covers everything inside their unit. It usually does not.

This article explains how the two fit together and what a unit owner policy commonly includes: contents, improvements, liability, loss assessment and additional living expenses. Policy wording differs between insurers, so treat this as a map for your questions rather than a promise of what any policy pays.

What the corporation's master policy covers

Under sections 99 and 102 of the Condominium Act, 1998, the condo corporation must insure the units and common elements against major perils such as fire and flood. It must also carry liability insurance for unsafe common areas or machinery, and directors' and officers' insurance is required under section 39.

The key limit is what counts as the unit. The corporation's policy does not cover improvements or non-standard parts of a unit, and fixtures, furnishings, equipment and personal property are not part of a standard unit. That gap is what your own policy is meant to fill.

What a unit owner policy commonly includes

Owner policies are usually built from several parts. Names and limits vary, so ask your insurer or broker to show you each one in writing.

• Contents: your furniture, clothing, electronics and other personal belongings, which are not covered by the corporation's policy.
• Improvements and betterments: upgrades beyond a standard unit, such as custom flooring, cabinets or fixtures. The master policy does not cover these. Ask how your insurer defines a standard unit and what limit applies to upgrades, especially if you bought a unit with upgrades from the builder.
• Personal liability: protection if someone is injured in your unit or you accidentally damage another person's property. Check what the limit is and what is excluded.
• Loss assessment: help with your share of a charge the corporation passes on to owners after a loss or other cost. Ask what kinds of assessments it responds to and the maximum.
• Additional living expenses: costs such as temporary housing if an insured event makes your unit unlivable. Ask how long and how much it pays.

Whether each of these is included, optional or limited depends on the insurer and the policy. Do not assume; compare the actual wording.

Where deductibles and assessments reach you

Under section 105, the corporation pays the part of an insured loss below its deductible. Where an owner's own act or omission causes the damage, the lesser of the deductible or the repair cost is charged back to that owner's unit. A by-law can make owners liable in more situations, such as accidental damage where no one is at fault.

That is why liability and loss assessment coverage matter. Read your building's by-laws on deductibles, then ask your insurer whether your policy would respond to a chargeback of this kind.

Special assessments are a separate risk. A board can levy a special assessment through common expense fees without owner approval, although the governing documents may contain provisions about it. Each owner's share uses the same percentage as their common expense fees. An unpaid special assessment gives the corporation a lien on the unit, covering the unpaid amount, interest and all reasonable legal costs of collecting it. Whether insurance helps with a given assessment depends on its cause and your policy wording.

Are you required to buy it?

The Condominium Act does not itself make owners carry insurance, but the corporation's governing documents may require it. Tenants are not legally required to have insurance unless their lease or the governing documents require it.

Even where it is not required, going without leaves your belongings, upgrades and any chargeback exposure uninsured. If you rent out your unit, the same gap exists for your own improvements, and a tenant may want their own contents coverage.

What to do next

• Read the declaration and by-laws for any insurance requirements and deductible rules.
• Ask the property manager for a summary of the corporation's insurance, including its deductible.
• List upgrades you made or bought, and keep invoices and photos.
• Ask your broker how the policy treats improvements, liability, loss assessment and additional living expenses, and get the answers in writing.
• Review the policy each year, and after any renovation.
• Speak with a lawyer if a chargeback or assessment dispute arises.

Frequently asked questions