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Condominium Insurance Insights

What is condominium insurance? 

As a condominium unit owner, you have title to your own unit, as well as a share in common (and or managed) property such as the lobby, hallways, parking garage and other amenities. A bare land condominium may have fewer common areas, typically just streets or roadways but can also include managed property such as the roof, exterior siding, and sewer lines. It is important to note that the definition of what is “owned” by the unit owner depends on the condominium and typically outlined in the bylaws and on the condominium plan. 

If you have purchased a condominium unit, the insurance policy you bought might have seemed similar to something like the coverage you might have gotten with a Tenant insurance policy (i.e. Personal contents and liability).    

When it comes to buying condominium owner coverage, it is important to note that coverage is available under two separate and distinct policies: one for the corporation, and one for the unit owner. 

 Having two insurance policies can be confusing but while the two policies are separate in their coverages and wordings, in combination, they may provide all risk coverage for your unit and contents.

Detailed information about what is covered is specific to each Corporation and typically  defined in the Condominium Bylaws.  Your Insurance Broker is the expert with respect  to your personal coverage. Call them and discuss your concerns to make sure you get  the best possible coverage for your protection. 

Tip: Provide your condominium corporation’s insurance policy plus your bylaws to your insurance broker. This helps to make sure you have the proper coverage in place. 

Why do I have to buy condominium unit owners insurance? 

 The Condominium Property Act specifies that condominium corporations are responsible to insure Corporation owned property, and unit owners are responsible to insure their Units and personal property.   

 In addition to the Corporation’s policy, it is especially important that you also have a Condominium Unit Owners Policy in place for your protection. Remember: The Corporation’s policy does not cover your personal contents, liability or in many cases, improvements to your unit. 

 How does this insurance benefit me? 

 Like homeowner’s insurance, a condominium owner’s policy would cover the insured’s personal property and contents, third party liability, and additional living expenses in the event something happens (like a fire or burst water pipe) that prevents them from staying in their home.  

 In addition, condominium owner insurance also protects the unit’s improvements and betterments, deductible costs, the unit itself or a loss assessment on the building should the corporation have no insurance or have inadequate insurance for which that the owner’s policy would normally cover. 

 What is Loss Assessment Coverage? 

 Loss assessment coverage is unique to condominium insurance. Since unit owners share responsibility for common property or elements, this coverage pays your share (up to a stated limit) for a major property or liability loss on common property.  

 Important insurance changes impacting deductibles and loss assessment coverage 

 Effective January 1, 2020, the Condominium Corporation has the power to seek recovery from any Owner where damage has originated from the owner’s unit for the deductible up to a maximum of $50,000 on an insurance claim.  This “absolute liability” means that regardless of whether there was proven negligence or not, the Corporation can hold the Owner liable.  This clause is part of the Condominium Regulations (Section 62.4). 

 For example: 

 If the Corporation’s deductible is $15,000, and there is damage that originates from an owner’s unit, in the amount of $20,000, the Condominium Board has the authority to recover $15,000 from the Owner. 

 Alternatively, if the Board has a $15,000 deductible, but the damages are only $5,000, the Board only has the authority to recover $5,000. 

 In the same regard, if the Corporation has a deductible that is over $50,000 and damages exceed the deductible, the maximum the Board can recover is $50,000. 

 What steps can condominium unit owners take to protect themselves and have the proper condominium unit insurance policy? 

  1. Ask your Condominium Board or Property Manager for a copy of the Corporation’s Insurance  Certificate 
  2. Contact a personal Insurance Broker and provide them with a copy of the corporation’s certificate along with a copy of your condominium bylaws
  3. Confirm that their Unit Owner policy has deductible or loss assessment coverage and how much  they are covered for in the event they are obligated to pay. 
  4. Confirm the amount of the deductible for the Condominium Corporation’s insurance policy(on the corporation’s insurance. 
  5. Confirm that the value of deductible coverage in their Unit Owner policy is at least equivalent to  the value of the Condominium Corporation’s deductible; and 
  6. Pay attention to any notice from the Corporation which changes or increases the amount of the Corporation’s deductible and increase their coverage (to a maximum of $50,000), as required. 
  7. Get written confirmation from your insurance provider that they have deductible coverage for the Corporation’s deductible.
  8. Keep a copy of your policy with your important documents and review coverages annually on receipt of your corporation’s insurance renewal for any changes or coverage updates. 

 Note: Deductible coverage is different from special assessment coverage.  

With close to 50 years of property management experience, Emerald Management & Realty Ltd. is a licensed property management brokerage and trusted to respond with experience and responsive systems. Emerald Management & Realty Ltd. offers a wide range of condominium property management services.  Our primary goal is to offer peace of mind and help condominium boards realize the long-term profitability, a solid governance approach and assist to minimize risk.  Contact us today to find out more about how our team at Emerald Management & Realty Ltd. can help by calling 403-237-8600. 

 


Property Insurance Market Update

The shift in the insurance market that started in 2018 continues to impact condominium corporations and multi-family rental properties across Canada.  Unfortunately, the hardening of the insurance market and aggressive changes by insurance companies continued into 2021 with Covid-19 hitting the insurance industry. 

Like many markets, the insurance market is cyclical.  In the recent past, benefits from a softer market were enjoyed by many in the property management industry. However, the long-term results of rising claims and reduced profitability, further impacted by a world-wide pandemic has the property management industry in a hard market.

Hard Market 101 - Lloyd Sadd Insurance Brokers Ltd.

 

The property and the real estate market are leading the lines of the insurance coverage hardest hit[1] by the hard market cycle.  This is due in part from increases in property claims, water damages, natural catastrophes, and fires.

In addition to the increased claims, the other factors impacting property management & real estate insurance market include:

  • Increase in replacement cost valuations on an average of 7-10%
  • Increase in the number of claims and frequency of claims made by condominium corporations and stratas (“claims inflation”)
  • Repair costs have increased on average of 10%[2]
  • Insurance industry recorded an underwriting loss of $244 million for the period and an overall loss of $5.1 million[3]
  • Historic low interest rates
  • Increase in severity for liability losses (“social inflation”).

Equally important, there has been a decrease in the number of insurance companies in Canada that are willing to insure real estate, especially condominium corporations.  In such cases, capacity is restricted resulting in less insurance supply.  For this reason, the increase demands leads to increased premiums.

Reported increases in the media highlighting higher premium rates and shrinking coverage capacities confirms what we are seeing and hearing from our partners and services providers.  Alberta is not unique as this market is being throughout Canada and the United States.

Emerald Management & Realty Ltd. has been actively working on this year’s insurance renewal for properties.  With many of the leaders in the insurance markets indicating hard market our team has been heavily involved in navigating the current insurance market with our team and master insurance partners to mitigate the financial impact from the changes in the marketplace to achieve the best rates for our clients.  

The following is a snapshot of the strategic marketing undertaken by our team to aggressively respond to adverse market conditions.  Our goal is to mitigate the financial repercussions impacting condominium corporations and multi-family rental dwellings across Canada.  

 

How to get ahead in a hard insurance market?

With insurers struggling to meet demand, there has been an increase in information required.  Many insurers are placing requirements such as the: mandating preventative maintenance programs; replacement of roofs; and even, mandating improvements to boiler & mechanical systems and the replacement of hot water tanks & furnaces. 

Insurers want more robust information, and it is important that you are prepared. It is integral that preventative maintenance programs are in effect and inspections are up-to-date.  Properties need to be well maintained and risk assessments completed.  In situations where the insurer requires replacements or improvements, the time taken and information gathering helps in the long run when it comes to renewal conditions.

Our valued partners at Lloyd Sadd Insurance Brokers Ltd. further recommend that to get the best results in a hard market you need to:

  • Start early
  • Provide a robust renewal submission highlighting your maintenance programs and property management standards
  • Focus on claims mitigation
  • Keep property appraisals up to date
  • Build partnerships and promote loyalty[4]

The early intervention taken by Emerald Management & Realty Ltd., including gathering and preparing information to promote the properties and condominium corporations has been presented and marketed to various insurance companies. Early indications and feedback from the insurers indicate that the process has proven to assist with renewals.  

Further to the current insurance environment, Emerald continues to work on behalf of its clients to minimize the impact of this shift on pricing to maintain the benefits of our insurance program.   We continue to be focused on achieving the advantage of our low corporate rates, reasonable deductible levels, prompt claims management, rental revenue loss coverage, vacancy coverages. 

To discuss the Emerald Management & Realty Ltd. master insurance program advantage and any concerns you have with your current property coverage please contact our team today. 

For more information about the hard insurance market visit:

[1] Hub International 2021 Hard Market Information Bulletin

[2] BFL Canada Insurance Services Inc. Market Insight December 2018

[3] Navacord Hard Market Insights

[4] Lloydsadd Hard Market Insight 2021


Your Responsibilities As A Condo Owner

When you own a condo, you can reap the convenient benefits of a maintenance-free lifestyle similar to that of apartment living but you have your name on the title — all while sharing ownership of the common areas. Amenities are also often abundant for most units as most condominiums are relatively new to our market, with air conditioning, landscaping, modern kitchen appliances and laundry included in most properties. 

Condo living is available for everyone: from first time homeowners, working professionals, families and seniors. There are some communities or buildings that are childfree, so be sure to do your research!

Usually, Condo Board of Directors, (as it’s commonly referred to in Alberta) are elected by you and the rest of the owners of the condominium corporation community — and must be composed of at least two-thirds owners or mortgagees within your community. The Condo Board typically sees management from a governance perspective and leaves the day-to-day operations to a property management company.

However, as with most living situations, there are caveats of owning a condo. Living in a condominium unit isn’t like owning a single-family home.

Here are just a few of the regulations that you’ll be expected to follow:

Follow your condo’s, bylaws and rules

Condominium owners are subject to contributions (commonly referred to as condo fees) — which include costs for insurance, professional tasks, exterior repairs, maintenance of items such as siding and windows and landscaping, and funding the Reserve Fund. Failure to pay them on time, can result in being charged interest, or in extreme cases: legal issues or even foreclosure.

Condo owners are also responsible for looking over and understanding all documentation on bylaws provided to them by their Board of Directors. This  includes  important resources like board meeting minutes, insurance certificates and notices advising of specific changes in your community’s day-to-day operations. Voting and the administration of the Owner vs. Board of Directors is outlined in the Condominium Act of Alberta. 

 

While your province’s specific guidelines can vary, common bylaws include condo owner insurance requirements, pet restrictions — commonly weight restrictions or certain breeds disallowed. Noise level restrictions are also common, with quiet hours sometimes enforced. 

Failure to comply with these bylaws and regulations can and will have consequences for you as a condominium owner , so we suggest you ensure that you’re knowledgeable on all bylaws and any new developments with your particular building or condominium community. 

Repair and maintain the unit

Some may not be fully aware, but you are 100% responsible for all plumbing, appliances, fixtures and wiring in your condo unit (unless its defined as common or management property. Another good reminder to understand what is in your bylaws!)There’s a common misconception that just because you pay condominium fees or perhaps live in an apartment style building that your internal maintenance will be covered. Be sure to consistently keep your unit in good working order, with all plumbing and wiring issues attended to as soon as is reasonably possible. 

Other responsibilities

Your guests can also be subject to regulation — specifically, the number of nights a guest is allowed to stay over consecutively. Rules regarding guests have been a source of light controversy, but this is mainly in place to avoid too much noise or as a reminder that owners are responsible for their guests when on common or managed property. Some legislative bodies have also placed restrictions on numbers of people allowed during COVID-19 as a health and safety measure.

Your exterior space can  also subject to some restrictions — particularly hanging clothing to dry, barbequing and hanging decorations.  

Most communities have regulations on renting your , but most allow it on the basis that certain standards are met and to be in compliance with Human Rights legislation. In the same vein, use of your condo as an AirBnb usually is not permitted, although specifics on this can be verified with your Board of Directors. 

Call your Calgary property management experts today!

Our team at Emerald Management & Realty Ltd. is more than ready to help Condo Boards and Condominium Corporations address their Condominium management needs. . We service Condominiums  in Calgary, Airdrie & Area Our property management offerings can be tailored to fit your condo community.

Give us a call at (403) 237-8600 or contact us today to learn more about how we can help you with your next steps!


COVID19 Update Mandatory Mask Bylaw

Mandatory Mask Bylaw

On August 1, 2020 the Calgary temporary mandatory masks bylaw comes into effect.  This bylaw requires the wearing of masks or face coverings in any indoor space that the public has access.  Businesses are also required to post signage where applicable along with maintaining a safe work environment.   

As we continue to work together to help flatten the curve in Calgary, a sign requiring the use of a mask is posted at Emerald Management & Realty Ltd.’s front entry as the main reception area could be perceived as a public area.  Current social distancing and sanitizing protocols remain in effect for the protection of our team and clients.  

We understand that some people may be unable to wear a mask due to various medical reasons.  This is a situation that we will address with kindness and understanding.  That being said, our team understands that it is important to be in compliance with this bylaw for the safeguard of fellow team members, clients and customers.  Everyone’s support and cooperation as we work with this new bylaw is most appreciated.  

Our goal at the onset of Covid-19 was to keep our team and clients safe, healthy and working.  As we enter this next phase, wearing a mask, practicing good hygiene, maintaining good health and wellness,  in addition to remaining diligent to the habits already developed continues to be important.  Our team is aware that when it is not possible to maintain social distancing in accordance to Alberta Health Services recommendations, a mask is required when in public, on a job site and when working with customers.  

In support of this temporary bylaw, half a million masks have been made available for free around the city of Calgary.  Free masks in packages of 10 are available at select recreation centres, Calgary Transit stations, bus terminals, and animal shelters. 

For more information on this Bylaw and for helpful tips to help limit the spread, visit: 

 COVID19 information continues to be fast moving.  Please let us know if you have any concerns or notice a sanitation issue in properties being managed so that we can work together to minimize the risk of transmission.    

A big thank you, from our team to all of our clients, customers, trade members and third party contractors, for your support and collaboration during these difficult times! Stay well!


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