Carrying insurance coverage for water-related loss is critical to owning a condominium unit. As a condo unit owner, you should know what coverages are available, how to find the right policy, and what to expect during the claims process.
We recently had the pleasure of speaking with Katie Mellor of Chris Mellor Insurance Brokers Ltd, who answered our questions and shared valuable insights and knowledge about water damage coverage and condominiums.
What water-related loss does insurance cover?
A typical condominium unit owner’s policy generally covers water escape from plumbing equipment. This includes but is not limited to damage caused by bursts and leaking pipes, toilets, water escape from an air conditioner or appliances like a dishwasher, washing machine, or hot water heater, as well as inadvertent overflow of a bathtub or sink. Generally, your policy will cover damage to your unit’s betterments, improvements, and contents. However, it is essential to note that the damage or fault to the plumbing equipment that may have caused the loss is not covered. As a unit owner, you are responsible for the cost to repair the pipe, leaky toilet, or appliance that faltered.
Weather-related water loss is also insured, but in the case of condominiums, the damage that may occur to the building is covered by the condominium corporations policy, however resulting damage to your unit betterments and improvements and contents would be covered by your condominium unit owners policy.
Are there other water-related coverages that you can buy?
Yes, there are further water loss-related coverage options that you can choose to purchase from most insurance carriers – Sewer Backup and Overland Water (flood). These provide coverage for damage to your unit betterments, improvements, and contents if water backs up through a sewer into your unit or a body of water or rapid deluge of precipitation enters your building at or below ground level. For high-rise dwellers who think this doesn’t impact them because they are on a floor above ground level, think again! Your corporation can assess you if they don’t carry enough insurance coverage for a Sewer Backup/Overland Water (flood) that occurs. Your condominium unit owner’s policy will only respond if you carry like coverage! This is often a reasonably cost addition to your policy and will also afford you coverage for your contents stored at the basement or ground floor level if you have a locker for these types of water loss. For anyone in a condominium townhouse, these coverages are essential for purchase.
What happens if my unit is deemed to have caused water-related loss to another condo unit owner or vice versa?
This is where condominium unit ownership can be tricky, and a careful review of the corporation by-laws needs to occur. Some corporation by-laws ask that all parties claim from their respective insurers for their own loss or damage, but newer corporations have altered this to make the unit owners where the water escape transpired responsible for the loss entirely.
What doesn’t the condominium unit owners water peril cover?
As mentioned previously, the fault that caused the water to escape is generally left to the condominium unit owner to remedy. An insurance policy covers the resulting damage. Seepage or water damage over time is generally excluded as well, the loss should be sudden and accidental. Sewer Backup and Overland Water (flood) generally need to be endorsed in the policy to be included.
What can I expect if I make a claim?
Generally speaking, you should consider the size of the loss before you report or move forward with any claim, regardless of whether it is a water-related claim or not. Most policies carry a deductible, often of $1000 or more. Many great restoration options are available to mitigate further damage. The first action plan should always be to fix the failed equipment as soon as possible. If there is damage to another unit owner’s unit, it is generally best to report to your insurer and the corporation. Your insurer may need to liaise not only with yourself for your damage but the corporation’s insurer and any additional unit owners that have resulting damage.
Why is condominium unit owners insurance important?
Condominium unit owners insurance is important for several reasons. It protects against more than just water-related loss. It covers you for many perils, including fire, vandalism and theft, to name a few. Further, it provides coverage for the cost of living elsewhere if you cannot live in your unit due to an insured loss and covers your personal liability worldwide. Depending on just the corporations building insurance is not sufficient. Any upgrades that have been made to your unit above and beyond what the corporation deems a standard unit is your responsibility. Newer corporations download a bevy of items to the unit owner and often include drywall, sinks, toilets, countertops, cabinetry and flooring. Additionally, many lenders require condominium unit owners insurance to obtain a mortgage. Without this coverage, a condo owner may not secure financing for their unit.
How to find the right condominium unit owners insurance policy?
When shopping for condominium unit owners insurance, it’s important to work with a reputable insurance professional who can help you find the right policy for your needs. Consideration should be made for appropriate limits of coverage for your contents and unit betterments and improvements, the policy deductible, and corporation deductible assessments (yes, your corporation can assess you their deductible if you are deemed responsible for a loss that affects other areas of the building) as well as premiums when selecting a policy. It’s also important to read the fine print and understand what your policy doesn’t cover. Be sure to ask questions and clarify any concerns before you have a problem!