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Magnum York recently hosted a zoom webinar with BFL Canada to discuss the difference between Owner’s insurance and Corporation Insurance, Betterments & Improvements coverage, SIUD’s, responsibility for damage and much more. We were joined by 3 BFL Canada Panelists, including:
Lesley Desmarais, Client Executive, Real Estate Division
Angela Colabella, CSA Team Lead, Real Estate Divison and,
Judy Farrell, Client Service Assistant, Real Estate Division
Thank you to BFL Canada and all those who attended. To register for future webinars, visit: https://magnumyork.com/webinar/.
Table of Contents
Who are BFL Canada?
BFL Canada an independent, employee-owned and operated insurance brokerage in Canada and has been a longstanding preferred partner of Magnum York. Lesley is part of a 25 person team who focuses solely on Condominium Insurance and are considered experts in the field.
BFL Canada insures over 2,000 Corporations in Alberta and acts as the broker, not insurer.
What Does the Condominium Corporation’s Policy Insure?
The Corporation’s insurance policy is required by the Condominium Property Act, to insure all:
- Units
- Common Property
- Common Assets
- Building as shown on the condo plan
- Original fixtures installed by the developer
One exception is betterments and improvements made to the unit. Owners can refer to their Condominium Bylaws to read what the Corporation is responsible for insuring and what the unit owner is responsible for insuring.
It’s important that unit owners know clearly what they are responsible for insuring.
Myths & Facts Regarding Condominium Insurance
A common myth in Condominium Insurance is that the Corporation insures the common property and exterior walls and the owner insures the interior of the unit. If anything originates from within the unit, legislation outlines that it is the Condominium Corporation’s responsibility to first respond and to complete repairs, up to what are considered betterments and improvements. If outlined in the Corporation’s bylaws, betterments would be the responsibility of the unit owner and the unit owners insurer.
It does not matter if the loss was negligence, human error, an accident, the Corporation’s insurance is there to cover what happened and not how it happened.
What is Insured on a “unit owners” Policy?
The unit owner’s policy is to cover the items that the Corporation is not responsible for.
7 things to remember when talking to your insurance broker
- Personal Property – you want to ensure it’s on a replacement cost basis (without depreciation). You don’t want to have coverage in place for actual cash value, you want to replace new for old.
- Betterments and Improvements – this depends what has been upgraded in the unit, including what was improved prior to your possession. If your bylaws state the owner is responsible for betterments and improvements, this means you are responsible for all improvements that have been completed in the unit since it was built.
- Ensure the limit is adequate – you want to make sure water, sewer backup and overland water endorsements are included in your policy.
- Covering high value items – if you have items of special value, including collections, jewelry, artwork, you want to ensure those items are covered. You want to ensure all of your possessions are insured appropriately.
- Deductible assessment limit – this is important, as of 2020, the Corporation can assess back the insurance deductible so you want to insure your limit is adequate. Legislation states that the Corporation can charge back the deductible for a claim made up to a maximum of $50,000.
- If you rent your unit – if you do, you will need to have a landlord unit owner’s policy. This would cover your rental income so that you’re being protected with your investment.
- Freezing exclusion – if you’re a snowbird and like to travel in the winter, leaving the unit unattended, generally there is a minimum time period limit on how often your unit should be checked on while away. If this isn’t adhered to, insurers could refuse coverage if there was a freezing burst pipe or water damage in the unit.
It’s important to check in with your insurance provider and discuss these items to make sure you have full and proper coverage through your owner’s policy.
Who should insure unit owner Betterments and Improvements?
Currently, the Corporation’s bylaws will determine who is responsible to insure unit owner betterments and improvements to the unit. Betterments and improvement doesn’t mean swapping new for old, this applies when upgraded over and above the base unit or SIUD (standard insurable unit description). This only applies to upgrades to the units and does not apply to common areas of the property. It’s important to insure all upgrades to the unit, even from past owners.
Owners will need to refer to their SIUD to determine the base unit.
What is an SIUD?
An SIUD stands for Standard Insurable Unit Description. Legislation has mandated that all Corporations have an SIUD, this provides clarification when there are damages to the unit and who is responsible to repair and replace what in the unit. This is an important document to have and should be referred to when there is a loss in the unit.
An SIUD is for the unit only and does not apply to common areas of the property.
How is a claim handled when a Corporation does not have a registered SIUD?
The claim will rely heavily on the property appraiser, who can look at the replacement cost and has knowledge of the units. The Board of Directors may also have knowledge of what the base unit should be.
Who is responsible when there is damage in the unit?
As per the Condominium Property Act, when there is damage to an individual unit (interior), multiple units or common property, the Corporation is responsible to repair or replace the damage. The Corporation will be the first to respond and the unit owners insurance is considered excess insurance.
Always refer to your Condominium bylaws as some may differ from conventional, typical bylaws.
Changes to regulations in 2020
On January 1, 2020 there were changes to the regulation, which states:
When damages occur, the Corporation is responsible for base unit repairs but the owner is responsible for betterments and improvements, if that is how the bylaws read.
What should you do when there is damage in the unit?
First and foremost, attend to the emergency. Call 911 if there is a fire, or turn off the water supply if there is a water leak in order to reduce or stop further damage. Next, reach out to your property manager (at Magnum York, we have an emergency line if it is after hours, visit https://introducing.magnumyork.com/emergency for more information) and your own insurance representative.
Not all incidences that occur are an insurance claim under the Corporation’s polcy.
It’s important that damages are reported as soon as possible so they an be treated if needed. If a water loss is left, mold could form, which falls under an exclusion in some policies and may not be covered.
Top 5 Questions and Answers
- What are some examples of betterments and improvements in a unit?
This would be any upgrade from the SIUD. If the base unit is stated to have laminate type countertops and your unit has granite or marble, that would be considered an improvement and betterment. A lot of times standard flooring gets upgraded from linoleum or carpet to hardwood, this could be a betterment and improvement if the SIUD states all units were built with linoleum flooring. - Do bareland condominiums fall into a separate category to standard condominiums?
Bareland Condominiums are still legislated under the Condominium Property Act, but their bylaws will dictate how the insurance is to be placed. A lot of bareland condominiums have traditional bylaws and are treated like a conventional condominium corporation. - How often does a unit need to be checked on if the owner is away?
For unit owner’s insurance, check with your broker as it would depend on the insurance company. With respect to the condo corporation insurance, there is no stipulation. - In the case of a damaged unit that the Condominium Corporation gets repaired, and bills the owner back, does the owner get a say on who would be the contractor repairing the unit?
It would be up to the Corporation of who they would want to use. It’s important to have reputable companies completing the repairs. - If the damage is below the Corporation’s deductible, what typically happens?
The Corporation is still responsible for repairing the damage, but if it is below the Corporation’s deductible, they can charge up to whatever your unit owner deductible is up to a maximum of $50,000. Some incidents do not fall under a claim, but the damages will still need to be repaired.
Further Resources:
- BFL Canada
- Condominium Property Act
- Webinar Recap: Restoration 101 – What Happens When Disaster Strikes?
Knowledge is power. Register for future Magnum York webinars – https://magnumyork.com/webinar/
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