Condos represent huge market for insurers, who should advise customers about risks

Published: August 11, 2017

Updated: July 24, 2018

Author: Luke Jones



Condos are big business across Canada as more people enter the market. While it is becoming a booming market for homeowners, mortgage lenders, and agents, it also presents an opportunity for insurance companies.

However, there is a significant obstacle in the form of condo owners who do not understand their insurance needs. For example, customers often believe the condo corporation master policy fulfils their needs and covers all contents within a building. Simply, this is not true:

“Many clients are completely unaware of what insurance they need for their condo. The common misconception is that condo corporation insurance covers individual inhabitants’ contents, but this is not true,” said Ann Marie Coombe, VIP Client Account Manager CIP, Dan Lawrie Insurance Brokers. “When people buy a condo unit, they receive a package from the condo corporation which will contain a set of bylaws for the particular unit. The bylaw will state what a standard condo unit is and what the insurance requirement is.”

The Condo Corporation master policy provides owners with protection for damages to a building and communal areas. Every other aspect of the condo (including its contents) must be insured by the owner of the unit.

There are diverse types of master policy and owners are urged to properly understand what they would need to cover in an individual unit.

“As a broker, it’s important for us to make sure the client is properly advised by their lawyer and that they fully understand their condo contract and what coverage they need,” commented Coombe. “I will speak with my clients and tell them to go back to their lawyers and get the information they need to determine their insurance requirements, because a lot of them don’t have a clue.”

Owners must also consider that some contracts mandate unit owners to apply the corporation deductible when making a claim. As a result, insurance companies should advise owners to always have protection against the application.

“Another cause of concern when placing condo coverage is the loss assessment requirement,” Coombe added. “If somebody gets hurt in the condo complex and the condo corporation is sued, the corporation can assess the individual unit owners as part of the claim if it doesn’t have enough liability insurance coverage. It can assign portions of a claim upon the condo owners.

“It’s another exposure you have as a unit owner. Condo policies always include package extensions such as contents, liability insurance, additional living expenses and loss assessment coverage. Brokers need to make sure clients have everything covered.”