Insurance—Did you Know?
From the CCI Review 2021/2022-4 June 2022 issue of the CCI London Chapter
It appears premiums have stabilized for most condominium corporations that are claimfree for 3 years or more, and newer (builds) than 40 years of age.
Some ways to mitigate rising premiums
A lower deductible may provide long terms savings, that is to say if your corporation does not have claims. Let’s say you increased your deductible from $5,000 to $10,000, after approximately 8 years later you would be ahead if there was a claim. (this is rule of thumb based on a savings of $600 annually, there are many variables) Some feel they want a higher deductible as they would not make a small claim. Decide what your corporation threshold is, for example you may have a $5,000 deductible but will pay for claims of $7,500 or less. Where a unit owner is responsible for the corporation’s deductible, you may wish to increase that threshold.
As a unit owner you may never have a claim; but as a corporation, there are many units which can drastically increase the likelihood of a claim. Going 8 years without a loss at a condominium corporation is rare.
Get 3 quotes! Well, this practise hasn't applied to condominium insurance for many years. Most corporations are insured on a program and the brokers are always on the lookout for better. Today there are very few insurers that are competitive when quoting on condominium corporations. Asking for a quote every 3 years is good practise; however, don't be surprised if there is no alternative.
Your condominium manager and insurance broker value your business and want to do the best they can for you. They are always on the lookout for better and when better is available they will react.
Maintain your property
You can't afford to save money here. It will cost you in the long run. Put yourself in the position of the insurer, would you want to insure a corporation with uneven or sunken sidewalks, pot holes in the pavement, roofing that is past due for replacement and is a leaking structure? Prevent an issue, don't react to an issue.
Having a corporation that is in excellent condition not only increases the resale value, it potentially saves you more than you invested because the slip and fall or water damage claim never occurred. Maintain your dryer vents, have your smoke detectors and sump pumps checked annually, keep ice melt at doorways so unit owners can spread it when needed – snow maintenance crews can't be on site 24/7
Maintain your unit
Where Corporations are or are approaching 40 years of age: ask unit owners to invest in their unit, specifically heating, electrical, and plumbing, including the water heater. It would be rare that a unit would have a 40-year old furnace, ask the unit owner to advise when their furnace was replaced (it is usually labeled on the furnace).
Insurance companies are not keen on fuse panels, make note of the units that have breaker panels and when they were put in. NOTE: some insurers are OK with tamper proof fuses (type S).
Water heaters have a life of approximately 15 years (my last one was leaking at 11 years). Replace them at 12 years and keep record of when it was replaced. One can argue that a water heater that is in an unfinished basement, beside a drain, is not an issue; however, at present, insurers are not distinguishing between basement or main floor, they just want them replaced at 12 years of age, definitely before 15 years.
Insurance companies are driven by statistics and while your corporation may not be experiencing losses due to age, insurers have mountains of statistics that show otherwise. Again updating can only benefit you in the long run.
Get R Done
Technology has enabled us to do more and faster....so why are we always behind? As I am writing this, I am realizing why. The renewal process should start 60 days prior to renewal and usually does.
So why is the policy often late? When asked for renewal information, provide it right away. The renewal process typically has the broker requesting information from the property manager, the property manager sends to the board who completes and signs what is needed, then back to the property manager, to the broker, to the insurer. The insurer offers terms to broker, broker advises property manager and terms are accepted then broker advises the insurer to issue. (often the offer and acceptance is skipped if it is known that we won't find better terms)
NOTE: In order to speed the process, the broker may ask for terms based on no changes and provide signed documents prior to renewal.
Everyone is often inundated and with the renewal process going through so many hands, no wonder it takes so long. When asked to provide information, do it right away. This will help move the process along.
Understanding Condominium Insurance – Terminology
[from the Ontario’s Residential Condominium Buyers’ Guide https://www.condoauthorityontario.ca/resources/condobuyers- guide/
Condo Insurance: Under the Condo Act, condo corporations are required to obtain and maintain both property insurance and liability insurance.
Liability Insurance: Under section 102 the Condo Act, condo corporations are required to obtain and maintain insurance against the liability resulting from a breach of duty as the occupier of the condo corporation’s common elements or certain land as well as insurance against liability arising from the ownership and use of boilers, machinery, pressure vessels and motor vehicles.
Property Insurance: Section 99 (1) of the Condo Act requires condo corporations to obtain and maintain insurance for damage to the units and common elements that is caused by certain major perils, including fire, smoke, lightning, windstorm, hail, or any other peril specified in the condo corporation’s declaration or bylaws.
Standard Unit: A condo corporation’s obligation to insure the units does not cover “improvements” made to units. Section 99 of the Condo Act states a condo corporation’s obligation to insure against damage to units from major or other perils only includes what is called a “standard unit”. What constitutes a standard unit in your condo corporation is important as it not only outlines responsibility for property insurance coverage but also partly determines what the condo corporation or the condo owner is responsible for when dealing with repairs after damage. For more information on where to find your condo corporation’s definition of a standard unit, see section 3.5 of this Condo Guide - Living in Units and Using Common Elements.
Deductibles: According to section 105 (1) of the Condo Act, if an insurance policy obtained by the condo corporation has a deductible clause that limits the amount payable by the insurer, the condo corporation is responsible for paying the portion of a loss that is excluded from coverage, and that amount must be included in the common expenses.
A single owner may be responsible for paying a deductible if a claim to the condo corporation’s insurer arose due to the owner’s (among others) action or inaction. In this case, the lesser of the deductible limit or the actual cost of the repairs must be charged back to that owner’s unit. For more information on chargebacks, please see section 3.4 of this Condo Guide.
Your condo corporation may also have an insurance deductible by-law that would extend the circumstances in which an owner would be responsible for paying for a property insurance deductible. Common examples of extended circumstances could include:
- Where the owner, occupant, or guest of the unit, through an act or negligence causes the insured damage; and/or
- Where the insured damage is caused by accident (i.e., where no one is at fault).
Education sharing on insurance with your owners is important. There have been articles in previous issues and we will share some methods of successes in our next issue that you might emulate in your community.
Chris DiPietro, R.I.B. (Ont) is an account exsecutive with Selectpath Insurance (formerly May McConville), specializing in condominium management.
Chris was first elected to the Board of Directors of the CCI London and Area Chapter in 2015 and joined the Golf Tournament Committee. In 2015 he was elected by the Board as Vice President in 2016 and President for 2017 and 2018, continuing to assist on the Golf Tournament.
Chris has also contributed as a writer and presenter expert on insurance at our education events.
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