Floods, fires carry impact on all residents
Torstar News service file photo
A condo resident goes on holiday, asking a friend to look after her cat. The friend dumps the soiled kitty litter into the toilet. The litter, made of highly absorbent clay, plugs the toilet, which overflows, contaminating several floors of the building.
After a late night out drinking, a man comes home and decides he’s hungry. He puts a pot on the stove, and decides to lie down for just a minute. He awakens to a fire.
Come hell or high water, scenarios like these will cost you. The communal nature of condo living means you pay now through an individual insurance claim, or later when your condo fees rise because of higher corporate premiums.
No matter that someone else caused the damage to your unit, you are responsible for your contents, upgrades and living expenses if forced to move out during cleanup.
What happens in your specific condo corporation depends on the corporation’s insurance; a copy of the insurance certificate should be given to you each year, and you should also be able to examine the policy in detail in the property management office. It also should form part of the status certificate.
Because each condo corporation may have different insurance coverage, each unit owner needs a policy that will cover the things the corporation’s policy does not, says Mark Shedden, vice-president of Atrens-Counsel Insurance Brokers Inc.
His company insures about 3,000 condo corporations in southern Ontario and about 5,000 individual unit owners.
The Condominium Act says that a corporation should maintain a "reasonable" deductible, adding that the normal minimum standard is $1,000.
The majority of condo corporations have deductibles ranging from $1,000 to $5,000. Shedden says he knows of cases where frequent claims in a condo have pushed that figure to $10,000.
Rarer are deductibles of $25,000, $50,000 and, in one case he knows of, $100,000. One corporation has been unable to obtain insurance, he adds.
Grethe Nielsen, sales representative for Re/Max Professionals Inc. Brokerage, has some advice for buyers.
"It’s not (just) the unit you’re buying – you’re buying the building."
Personal injury coverage should be at least $5 million, she says.
Since the corporation insures not only the common elements, but the units, without improvements, she suggests looking at the status certificate for direction.
The status certificate will list such things as the "standard unit bylaw," which defines what the corporation must insure. In the absence of a bylaw, one looks to a schedule prepared by the developer. It will describe the units as-built.
Simply put, if you add hardwood floors, expensive window coverings or upgraded light fixtures, you need to insure them under your own policy.
Further advice from Nielsen:
>> Take photos of what’s in the unit.
>> Keep all bills for upgrades off-site (e.g., in a safety deposit box) in case of fire.
>> Each time you install an upgrade, inform your insurance agent.
"Become your insurance agent’s best friend," Nielsen says.
Quintin Johnstone, associate broker with Sutton Group Associates Realty Inc. Brokerage, has some further advice: Find out the ratio of tenants to owners in the building. A heavily tenanted building may be less attractive to an insurance company because there could be less pride of ownership, Johnstone says. It may also affect your ability to get a mortgage, particularly a high-ratio mortgage.
Also, he says, if the building has properly done its performance audit and reserve fund study, as required by the Condo Act, it shows the board is doing its job.
If you are renting out your unit, you should ask for proof of insurance from your tenant.
What if you move into a building under occupancy, which is not yet registered?
Daniel Horwitz, a lawyer specializing in real estate, says that if a flood is caused by a builder’s negligence, his responsibility and liability during occupancy would be covered by his insurance, or the contractors’ or subcontractors’ policy, depending on the case.
The builder must put occupants back in the same position they were in before the flood.
Such was the case at The Spire, by Context Development.
Principal Howard Cohen says that during construction, a pipe connection broke, causing water to flow for a few hours. Drywall in some units had to be torn out. A few people had to move out and there was serious water damage to two elevators. Total damage was approximately $2 million.
Cohen recommends occupants have tenants insurance for their contents until the building is registered.
A final caution: Water damage can also result from condensation, such as not running fans during laundry or showers, especially if several people live there. Heavy drapes can also impede airflow.