Transcript Insurance - Clifton Kok LLP

Insurance
The Condominium Corporation
& The Condominium Unit Owner
A presentation for The 2008 Toronto Condo Show, by
Darlene Cade, CSIB, BSC., Cade Associates Insurance Brokers Limited and
Michael H. Clifton, M.A., LL.B., ACCI (Law), Clifton Kok LLP Legal Counsel
Introductions
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Who we are
What we’ve brought you
The scenario
What happens when your toilet
overflows…..
Let’s step back in time
to just those few minutes before
the toilet overflows….
AND ASK OURSELVES….
Did we pay the insurance
premium???
And before we talk about
toilets…
What type of insurance do you need?
…What type of condo are you?
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Condos come in all shapes and sizes! Including:
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Multi-Storey Buildings;
Townhouses (side-by-side or stacked);
Stand-alone (detached) buildings;
No buildings at all (vacant land condominiums);
No units at all (common elements condominiums).
Our discussion will be limited to what is relevant for
Standard Condominium Corporations:* and
in respect of them, whatever the shape and size,
there is always a Condominium Corporation and a
Unit Owner.
*(For other types of condominium, see your insurance and/or legal counsel for advice.)
The Corporation’s Insurance
The Ontario Condominium Act, 1998 obliges
Standard Condominium Corporations to insure:
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All of the common elements, and all of the units
excluding “improvements”; (more on this after)
“boiler, machinery, pressure vessel and motor vehicle”
insurance, if such items are owned and/or used
Commercial General Liability related to the premises and
the occupation and operation of the condominium;
If available, Directors & Officers liability coverage.
A Bit About “Improvements”
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“Betterment” is not a term in the Act.
It is no longer accurate to use the term
“Betterment” or “Betterment &
Improvements” for condominium
corporations in Ontario
A Bit About “Improvements”
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An “Improvement” is any part of a unit
that is not defined as “standard” in the
condominium corporation’s “standard
unit definition”.
NOTE: If there is no “standard unit
definition” there are no improvements!
A Bit About “Improvements”
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The term “standard” has nothing to do with
what the Builder originally installed. It can
include owner-made changes to the property.
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Likewise, Builder-installed components of the
unit can be defined as “improvements”.
Therefore, it is very important to read and
understand your condominium’s standard unit
definition. (Hopefully to be found in your by-laws.)
A Bit About “Improvements”
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Standard unit definitions can vary from corporation to
corporation – you cannot rely on anyone else’s definition – be
sure your insurer understands yours! There are 2 basic
extremes:
“Status Quo”:
A “status quo” definition aims to preserve just that: the “status quo”.
This type of definition often includes a detailed table that may provide
specifications of certain fixtures, including paint shades, faucet styles
and sizes, trim, counters, counter-tops, flooring, etc.
“Bare Bones”:
This definition makes only the minimum components of the unit
“standard” – such as unfinished boundary materials or “shell” of the
unit (such as dry wall and sub-floor), and basic components required
for the supply of heat and utilities (but not necessarily including any
fixtures that use them).
A Bit About “Improvements”
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The condominium corporation is only
required to insure “standard”
components of the unit. The unit
owner is responsible to insure all of the
“improvements”.
Which brings us to the next topic…
Unit Owners’ “Ideal” Insurance
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Unit “improvements”
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Personal Property of
the Unit Owner
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Personal Liability of
the Unit Owner related
to ownership,
occupancy & use of
the Unit
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The Package also
includes:
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Contingent insurance
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To rebuild own Unit if
the Corporation fails to
carry sufficient
insurance to rebuild
Loss Assessment
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To pay assessments
imposed by the
Corporation related to
an insured loss – i.e.
Corporate Deductibles
What every unit owner
must ask:
Do I have sufficient insurance limits to
rebuild my Unit, with all my desired
improvements?
Claims for Unit Damage
Corporation’s Concerns
1.
Claims Frequency:
i.e. burns to floor, fire damage
to cabinets, countertops
and water damage claims
2.
3.
4.
& Action Plan
1.
Insurance Costs increase
2.
Cost of insurance is passed
through common expense
to Unit Owners
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Dissatisfied Unit Owners at
the next condo meeting!
4.
Start with a clear and sensible
Standard Unit definition (and
make sure the Owners know
what it says!)
Better Risk Management
awareness to Unit Owners
Increase Corporate insurance
Deductible
Unit Owner pays for damage
to own unit under the
deductible amount
Different Strokes for
Different Situations
Situation 1 – Within One Unit
Damage in Unit A,
affecting only Unit A
Situation 2 – Unit to Unit
Damage in Unit A,
affecting Unit B
Common Elements?
Situation 3 – Unit to Units
Damage in Unit A,
affecting Units B, C
and D
Situation 4 –
Unit to Common Element
Damage in Unit A,
affecting only part of
the Common Elements
Situation 5 –
Common Element to Unit
Damage in Common
Elements affecting
Unit A