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7 Ways to Maximize Your Condominium Corporation Insurance Coverage

As a board member, you know condominium corporation insurance is a necessity. However, you also need to understand the nuances of your policy and whether you’re getting the best rate. With insurance premiums rising, the higher cost can substantially increase condominium corporation common element fees if you’re not careful. Here are tips to maximize your condominium corporation's insurance coverage. 

What Is Condominium Corporation Insurance?

Like other types of insurance policies, condominium insurance serves as a safety net should something go wrong on community property. The purpose of condominium insurance coverage, also called the “master policy,” is to protect the condominium from liability if there’s an accident, injury, or damage within the condominium boundaries as defined in the governing documents.

The Condominium Act, 1998 S.O. 1998, c.19 for Ontario, in addition to your condominium corporation’s governing documents, should have details on condominium corporation insurance requirements, including the coverage requirements for the condominium corporation. However, it’s essential to consider the needs of your community when looking for the appropriate insurance coverage.

How to Get the Best Condominium Corporation Insurance Coverage

Luckily, there are ways to get the best condominium corporation insurance coverage—even in a high-priced market. Here’s how.

1. Consider Your Area

Once you know your property rate, you can determine whether it’s reasonable by looking at the average rates in your area. Because insurance rates vary around the country, you must consider where your community is located.

Knowing what other local communities are paying will help you gauge your own rate and shop around for a better condominium corporation insurance quote. Your broker will shop on behalf of the Corporation.

2. Understand Your Coverages and Deductibles

Although your governing documents will outline specific condominium corporation insurance requirements, there are six main policies that every community should consider:

  • Condominium corporation property

  • General Liability

  • Directors and officers (D&O)

  • Crime and fidelity

  • Boiler and Machinery

  • Legal

At the very least, communities should carry property, general liability, boiler and machinery, and D&O coverage. However, you may have all six or additional policies to protect your condominium adequately.

Knowing your condominium corporation’s coverages and deductibles is key to understanding your insurance premium. In general, higher deductibles mean lower rates. Ask your insurance broker about higher deductibles and deductible buy-down policies to see how that might affect your rate. A deductible buy-down policy reduces the amount you pay in a claim by lowering your deductible. Still, you usually pay an additional premium to the insurance company for a buy-down policy. You may have the option to lower your premium by adjusting your deductible.

3.  Standard Unit By-Law

Some condominiums are turning to owners to carry certain coverage on their personal policies. This affordable coverage can help pay a high deductible if something happens in the community. It also defines areas where a unit owner would be responsible and where the Corporation coverage applies.

Here’s an example of a standard unit by-law works:

  1. A bathtub overflows and damages several units below. The standard unit by law will define who is responsible for the insurance deductible and which interior finishes are covered by the Corporation policy, and which finishes should be covered by the owner's policy.

  2. Homeowners can also carry additional coverage and file a claim with their policies to cover a special assessment.

The good news is that many policies already have this type of coverage. Make sure you let homeowners know about the standard unit by-law and how it can benefit the community. If your corporation does not currently have one, consult your legal counsel to draft a by-law to meet the best needs of your community and the process to have this approved by a vote of the owners. 

4. Verify Your Community’s Information Is Correct on Your Policy

If your condominium corporation has had the same insurance agent for years, you might assume they know your community inside and out. However, you’re responsible for updating your condominium corporation’s information and verifying the details in your insurance policy.

For example, you may have added a playground or updated the clubhouse roof last year. If your policy is set to renew automatically, you may need the right coverage for these community amenities. Review your policy and provide accurate updates to ensure the corporation is adequately insured.

It is recommended that an appraisal be completed at least every three years to ensure that your policy coverage is up to date and that the corporation is appropriately covered as required by the Condominium Act.

5. Seek Bids Each Year

Unlike credit scores, it doesn’t hurt your condominium corporation to seek insurance bids yearly. Shopping for the best  condominium corporation insurance quote is a good way to determine if you’re getting a competitive rate for your community’s needs.

However, most commercial insurance agents will only release one quote from one carrier. Speak with a few agents or an insurance broker who can quote multiple carriers simultaneously. This will make it easier to compare coverage options when looking for affordable rates. Just confirm that the agent specializes in condominium corporation commercial insurance to get the correct type of policy for your corporation.

6. Consider the Quality of Coverage

When it comes to condominium corporation insurance, price isn’t the only factor that should be considered. There are plenty of inexpensive options that might look great on paper, but your community could face:

  • Very high deductibles

  • Low insurable values

  • Inadequate overall coverage

  • More out-of-pocket expenses

  • Poor communication or support from your agent

Evaluate the quality of your coverage when assessing your insurance premium. While it might not be the cheapest policy, you may still get the most bang for your buck.

7. Be Involved and Start Early

Lastly, keep up with your insurance needs and get ahead of any policy changes to help maximize your coverage. About 30 days before your policy is set to renew, review your coverage, speak with your agent, and shop for different options. You may find ways to keep your insurance premium relatively low, even when rates continue to rise.