Insurance for Condominiums in New Brunswick
This article is intended to clarify the insurance coverage required by Condominium Corporations and the insurance coverage recommended for condominium owners. Keep in mind that there are many insurance companies that provide insurance coverage products, and not all offer the identical products. This explains why each insurance claim may have a different outcome. As well, each condo corporation’s Declaration may have varying requirements for insurance coverage. For this reason, this article is intended for general information purposes only.
The New Brunswick Condominium Property Act (Chapter C-16.05) is the governing authority for condominiums in the province. The Act mandates in section 50(1), that Condo Corporations are required to obtain and maintain property insurance coverage for “the replacement value of the units and common elements”. As part of the requirement, each condo corporation is obliged to file a copy of the insurance policy or an insurance certificate with the Director of Condominiums annually, as required in section 28(5) of the Regulations 2009-169. So, property insurance coverage is a requirement under the legislation for condominium corporations, whereas, condo owners’ coverage is not subject to the Act.
However, unit owners’ coverage is subject to the requirements of the Corporation’s Declaration in the INSURANCE section, under “By the Owner”. In this section of your Declaration, the word “may” indicates the Condominium Corporation does not require the type of coverage described. The word “shall” indicates an obligation – the unit owner must carry this type of coverage.
So, what types of insurance does a condo corporation need?
Subject to a review of the condo’s Declaration, the basic needs for a condo corporation are:
- Replacement value of the common property and units (the original components of the building)
- General Liability (which may be subject to the by-laws) – to protect against injury or damage
- Equipment Breakdown – elevators, machinery, boilers, electrical equipment, etc.
- Directors and officers liability – protection against errors or omissions of directors and officers
- Crime insurance – to protect against loss of money or property taken by employees or members of the board
It is wise to purchase “all risks” or “all perils” insurance. However, each condo corporation will need to take into consideration the costs. As Declarations are unique, condo Boards should ensure the insurance broker receives the registered copy.
What types of insurance should a condo owner have?
Condo owners should purchase coverage for:
- Personal property – furniture, clothing, housewares, and all other personal items
- Coverage for betterments/improvements to the interior of the condo unit. The corporation’s policy covers only things that were part of the original building. So anything that was added after the original purchase was made must be insured by the condo owner. For example, the addition of hardwood floors, upgraded cupboards, bathroom renovations, or upgraded appliances. When purchasing a resale unit, the new owner is responsible to insure upgrades that were installed by previous owners.
- Personal Liability for protection against accidental injury or damage – due to the close proximity of other units, there is increased risk in causing damage to another unit or to the common areas. This liability coverage protects a condo owner financially should an unintentional injury or damage occur. For example, when someone has a leaking water cooler, which causes water to damage the ceiling of the unit below or when someone visiting your unit slips and falls, injuring their arm. Liability coverage will pay for the property damage or personal injury that the condo owner unintentionally caused.
What other types of insurance coverages are available for condo owners?
Additional coverage is available as follows:
- Loss assessment coverage – protection for incidents that occur on common property. Condo owners share the responsibility for common areas such as the fitness room, elevator, and lobby. Condo corporations should be insured for claims against the corporation insurance policy for damages to the common elements or lawsuits against the corporation. But, if there is not enough insurance to pay for the loss or if there is a high insurance deductible, special assessments are levied against each of the unit owners to pay for it. Loss assessment coverage pays for these types of special assessments.
- Compensation for additional living expenses – to cover costs of a hotel room, meals, moving, and storage, in the event of an insured loss and the condo owner cannot stay in the unit.
- Contingent insurance – in the event that the condo corporation has no insurance, or insufficient insurance, or insurance that does not cover the peril that occurred, contingent insurance will pay the condo owner’s portion. There have been reports throughout Canada that some condo corporations are finding it difficult to renew policies or to cover all perils. This type of coverage could protect the condo owner in these instances, by paying the owner’s proportional share. However, the condo owner needs to know what type of property coverage the condo corporation has and the amount of liability it carries. It is wise for an owner to collect a copy of the condo corporation’s policy.
- Coverage for condominium fees – due to a claim, if the the owner cannot live in their unit until repairs are made, coverage can be purchased to pay the condominium fees.
Need more information, still have questions? Contact Condo-Link Services at 506-206-2080 or visit our website – www.condo-link.ca.