Condominiums and Insufficient Insurance

Basic concepts

The condominium building is subject to two separate insurance contracts. The first is the condominium insurance. All condominium owners are required to have an insurance policy. This policy generally covers their civil liability, their personal property, additional living expenses, common area allocations and leasehold improvements, i.e. improvements that have been made to the condo since its construction. Several other options can be added to this contract. The second insurance policy that applies to the condominium building is the one that applies to the union of co-ownership, which generally covers the civil liability of the syndicate of co-ownership, the building and the common portions.

Insuficient insurance

In the event of a disaster affecting the building, the insurance policy of the union of co-ownership will repair the damage caused to the property and the building for which it is responsible. In the event that the union of co-ownership's insurance is insufficient, the co-owners may find themselves obliged to pay a portion of the damages claimed by the union. In order for the co-owners to be able to claim this damage from their insurers, the risk which caused the damage must be a risk covered by their insurance contract. For example, if water damage affects the first floor of a four-unit condominium for an amount of $50,000 and the syndicate of co-owners' insurance contract covers this risk for a limit of $20,000, the four co-owners must pay the remaining $30,000. If their insurance policy does not contain coverage for soil and sewer water damage, their respective insurers would not pay and the condominium owners would have to pay the loss.

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