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An explanation on the difference between an individual condo owners policy and a strata corporation policy.

This article is courtesy of Wilson M. Beck Insurance Services Inc.

The CONDOMINIUM ACT is applicable those coverages that pertain to the strata itself being insured, not the specific property owned by each condo owner.

Standard Coverage

The standard coverage that is usually arranged includes the Building, Glass, Boiler and Machinery. Third Party Liability and Officers Liability. Each strata corporation has the right to make modifications the unit owner should determine what coverage is being carried by the Strata Corporation.

The Condominium Act is specific in what the Strata Corporation is responsible for, ie, common areas as defined, common area glass, fire and acts of God, with respect to glass in individual units. If the Strata Corporation wishes to make amendments they must make amendments to the bylaws and have them passed at the AGM (Annual General Meeting).

Under the standard strata insurance, the value of any permanent fixtures are part of the building coverage. If, however, the individual owner decides to replace any of the fixtures with something else (ie, new cupboards, new carpet), these items are no longer covered by the strata building coverage. They are considered to be personal unit improvements and betterments and must be insured under the condominium owners own personal insurance coverage along with their personal belongings.

If one purchases a previously owned unit which had major changes done by the previous owner, these changes would not be a part of the strata corporation building coverage. In other words, the second [and subsequent] purchaser should find out if the first owner made any changes to the original unit furnishings put in when the building was constructed.

Strata Corporation Liability

The liability coverage by the strata corporation is to only insure exposures applicable to the corporation. As an example, if a third party trips on the lobby entrance or parking area, breaking a leg, the responsibility lies with the strata corporation. If the same person, however, trips on the carpet inside a suite, the responsibility lies with the specific condo owner, not the strata corporation.

For all of the above reasons, it is necessary for condo owners to purchase their own policy in in order to be adequately protected in the event on an insured loss.

What Does A Condominium Owners Personal Policy Provide Coverages For? The basic policy provides the following coverage:

  • Personal belongings.
  • Unit Improvements & Betterments.
  • Unit Assessment and Unit Contingent Coverage.
      1. Unit Assessment: Covers individual owners share of an assessment against all unit owners in condominium; but only as a result of an insured loss.
      2. Unit Contingent: If the Strata Corporation carries no insurance or inadequate insurance, this coverage will pick up the additional cost to the individuals unit.
  • Personal Liability Insurance
  • Optional Coverage - Can be purchased to cover jewelry, cameras, boats, etc.

The condominium owner should place coverage through a qualified insurance broker after reviewing what is necessary to adequately protect his/her assets and third party liability exposures.

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