The right insurance for your condo: what you need to know

New owners of condominiums are often surprised to learn that insuring their new shared property requires two policies: co-owner’s insurance and the condo corporation’s insurance. If there is a claim, it will be covered by one or other of the contracts, or both, depending on the nature and scope of the loss. It’s therefore best to be familiar with the specifics of these contracts to be able to make an informed choice.

Co-owner’s insurance

As a condo co-owner, you’ll need home insurance that’s suited to your situation. This insurance provides you with a variety of coverages, some of which are required by law or the declaration of co-ownership.

The first thing co-owner’s insurance provides is civil liability coverage. This protection is mandatory and must be for a minimum of one or two million dollars, depending on the number of units in your building. It covers damage you may involuntarily cause others. If, for example, your dog bites someone and causes serious injury, your washing machine breaks and leaks water into the unit below, or a fire breaks out in your condo and damages the unit next door, you’re protected. If you are found to be at fault, the condo corporation can ask you to pay the cost of repairs to all the portions the corporation is responsible for insuring.

The policy also covers your personal property (appliances, furniture, clothing, electronics, etc.), as well as any improvements made to the condo unit that are not included in the register containing the description of the private portions of the building. For example, if you change your kitchen cabinets for higher-quality ones, the difference in price between the new, higher-quality cabinets and the old, lower-quality ones will be covered by your co-owner’s insurance. The amount equivalent to the price of lower-quality cabinets will be covered by the condo corporation’s insurance.

Likewise, if you make improvements to the exclusive use common areas (for example, if you install ceramic flooring tiles on the deck), your home insurance will also cover these improvements.

With Bill 141 (adopted in 2018 and amended in 2022), improvements were made to co-owners’ insurance, which now offers a new provision known as Extension of Coverage – Loss Assessment. This option covers the amount that the condo corporation could claim from you to help cover building repair costs if its contingency fund or insurance amounts were insufficient. Be aware, however, that you need to be covered for the damage claimed by the corporation in order to benefit from this additional provision. For example, if damage is caused by a sewer backup, your insurer will cover the amount claimed by the corporation only if your policy includes sewer backup coverage.

Additional coverage or a minimum insured amount, e.g., for water infiltration and/or sewer backups, is sometimes a requirement of the declaration of co-ownership.

Condo corporation’s insurance

While your property is covered by the co-owner’s policy, the building housing your condo must be protected by a business insurance policy. It must include coverage for, among other things, the common portions of the building (e.g., lobby, elevators, roof deck), the fixtures listed in the register describing the private portions in each unit (e.g., bathtub, kitchen cupboards) plus common property (e.g., furniture on the roof deck), as well as the corporation’s civil liability. The Civil Code of Quebec requires condo corporations to keep a register containing a description of the private portions of the building. You can use this description to find out what improvements have been made to your condo and adjust your home insurance accordingly, so improvements are covered in the event of a loss.

In addition, condo corporations are required to establish a self-insurance fund. This fund covers the deductible in the event of a claim. Condo corporations are also responsible for having the damage repaired in the event of a loss affecting condo units or common areas. These repairs do not include co-owners’ property or condo improvements.

Insurance covering the usual risks (e.g., theft, fire) is also mandatory, and the contract must include a “replacement cost” endorsement for the building. In the event of a loss, condo corporations are also entitled to claim an amount from all the co-owners, whether or not they are affected, to pay the cost of repairing damage the corporation is responsible for insuring. (See Extension of Coverage – Loss Assessment for co-owners.)

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Properly evaluating your home insurance needs

Before choosing a co-owner’s insurance policy, be sure to read the declaration of co-ownership to find out what’s required of you when it comes to insuring the private portions. Also, get a copy of the condo corporation’s policy and read through it carefully. How much is the building insured for? Is the selected coverage sufficient? What is the deductible amount to be paid in case of a claim? If you find some coverage to be inadequate, don’t hesitate to make adjustments to your co-owner’s policy accordingly. Some endorsements (“riders”) are designed specifically to bridge the gap if the corporation’s insurance doesn’t measure up. Choosing coverage that’s perfectly tailored to your needs is the best way to avoid unpleasant surprises. As the saying goes, “forewarned is forearmed.” Talk to your insurer!