Starting January 1, 2020, the Government of Alberta enacted a major change to condo legislation that all condo owners should be aware of and ensuring to contact their broker or provider about.
The new rule allows condominium corporations to require owners to pay the entire building’s deductible amount for claims where the damage can be proven to have originated in a suite or a private area, such as a storage unit or an owned parking spot.
This means that for an incident such as a toilet leaking in your unit that causes damage to the building’s structure or to another unit, or for a fire that starts on your balcony and spreads, you will be more than likely on the hook to cover up to a maximum of $50,000 for your condominium corporation’s insurance deductible. Whether or not you were negligent does not factor in – condominium corporations and insurance companies are only concerned about where the incident started.
That’s why if you are a holder of a condo insurance policy, it’s very important to ensure that your coverage:
- Includes deductible insurance
- Is good for up to $50,000 of coverage
This is protection that will likely not add a lot to the overall cost of your policy, but will allow you to sleep well. If something happens in your unit, you will only be required to pay the amount of your personal deductible to enact the deductible insurance for the building. For further peace of mind, ask your condominium corporation to provide a copy of their current certificate of insurance to ensure your deductible insurance covers the building’s amount. As the condo legislation change stipulates that the maximum that can be charged is $50,000, you are wise to ensure that your policy includes at least that amount.
How Condo Insurance Works
As a quick refresher, your personal condo insurance policy will cover you for your personal property inside your condo and your storage locker. You may also include coverage against water damage, which we highly recommend, as well as coverage against insurance-related special assessments, which we also highly recommend.
Your building must carry its own policy, which covers common areas, hallways, roofs, and building envelopes against loss resulting from a named peril. Part of your monthly condo fees goes towards paying for your building’s policy. Your condo fees should also cover building upkeep and maintenance. Most condo buildings in Alberta include water in their condo fees, with some also including amenities such as heat and electricity. These are generally calculated based on the size of your unit, and as buildings age your condo fees will more than likely rise.
An increase in the amount of your condo fees may not be a bad sign, however. It should (hopefully) mean that your condo board is being judicious and is saving a good chunk of the revenues they receive for repairs and upgrades in what is usually called a reserve fund. Good budgeting in this way should save you from a special assessment you might not be able to afford.
Special assessments happen when condo boards determine that work must be done, but they don’t have the money saved in their reserve fund to carry them out. They have the right to split any additional costs among tenants at any time. For cases like these, ensure your condo insurance includes special assessment coverage, also called loss assessment protection, and ask about what exactly it covers. Some policies are better than others, as is usually the case. Which is why there are brokers like us at Lane’s to help ask the questions for you.
How Can My Condo Building Make Me Pay Their Deductible?
As we recently discussed in our article “Why You Should Have a Condo Document Review Before Buying,” condominium buildings in Alberta (and in other provinces) are having difficulty obtaining affordable policies. One reason condo building policies are expensive is because legislation requires that they be for replacement cost only, not actual cash value (ACV). Replacement cost differs from ACV in that it reflects the amount of money needed to repair damage back to the same sort of condition as it was originally. Given the cost of materials and labour these days, any sort of major repair is exorbitant.
Due to a number of massive claims being made, many of which can be blamed on extreme weather incidences, providers have been clamping down. Reports that condominium corporations have seen their deductibles rise from around $2,500 to $10,000 to upwards of $25,000 to $100,000 mean the condo legislation changes make some sense in that at least condominium buildings will not entirely drain their reserve funds trying to settle claims.
Insurance companies also like to claim that they take on extreme risk with their building coverage as there are many owners who do not have their own private insurance policies. In our experience, however, this is rare. We know that property owners are mostly carry their own coverage, and reputable condominium corporations will require proof of insurance before they will register a tenant.
Condo Insurance From Lane’s of Alberta
At Lane’s Insurance, we know that most property owners are very responsible and are entitled to the protection their policies provide. Whether or not you obtained your coverage through us, we are always willing to help explain the parameters of your policy and gauge if you have the coverage you need. If you have any questions about your condo insurance, contact us at our Calgary, Banff, Edmonton, or greater Alberta offices to see what we can do for you.
