Over the last few years, we’ve shared articles about what type of insurance you should have on your unit as a condo owner, as well as what coverage a typical condominium policy has. A topic we haven’t touched on before is deductible assessment coverage.
While most condominium insurance policies cover the cost to return a unit back to the standard unit construction in the event of a loss, sometimes the unit owner will be held responsible for the deductible on the condo corporation policy to process the claim. If you had deductible assessment coverage in your policy, you would be covered for this deductible, should it be determined that you are responsible to pay it. Deductible assessment coverage has always been a highly recommended coverage, considering that condominium policies often have a $5,000 deductible.
Let’s consider a scenario. Perhaps you were filling your sink to wash dishes and someone knocks on the door. You run quickly to answer the door, but accidentally leave the water running. You then get further distracted by visiting with your guest and all of a sudden there is $25,000 worth of damage in your kitchen (flooring, cabinets, baseboards, etc.).
In this case, the condominium insurance would cover the loss, but there’s a chance that the condo corporation could assess the deductible to you. However, if you had deductible assessment coverage you would pay your deductible, which may be $500, and your insurance would pay the $5,000 condo policy deductible. To repair the damage, the contractors would be paid $25,000 from the condo insurance policy.
If you did not purchase the deductible assessment coverage, you would personally be responsible for the $5,000 deductible. That would be a rather large, unexpected expense!
The issue becomes even more complicated when you realize the position that underwriters like Wawanesa Insurance, Red River Insurance, Aviva, SGI and Intact have taken concerning insuring condominium properties. These underwriters are sometimes reluctant to take on a whole policy by themselves, therefore they share the policy. In doing so, it potentially drives the rating up, which can only be mitigated by increasing the deductible. This means that some corporations have $25,000 deductibles.
As a result of the underwriters sharing the policy, in the scenario we shared earlier the unit owner would be assessed and responsible for a $25,000 deductible if they did not carry deductible assessment coverage. Ouch!
Vionell Holdings Partnership (VHP) provides rental housing and property management for an array of residential and commercial customers, including Condominium Management. VHP currently has nearly 4,000 units under management in Manitoba. VHP recently opened the Summit Life Lease Community on Brandon’s North Hill, which features underground parking and great views of the Wheat City. For more information please visit www.vhproperties.ca.
