HOUSING | Alberta’s New Condominium Regulations: Insurance - LawNow Magazine

HOUSING | Alberta’s New Condominium Regulations: Insurance

On January 1, 2020, revised condominium governance regulations came into effect in Alberta. This article is part of a multi-part article series on Alberta’s new condominium regulations.

The previous incarnation of the regulations primarily addressed the type of insurance condominium corporations were responsible for. For example, condominium corporations must maintain insurance to protect common property and condo units against loss resulting from destruction or damage. The new regulations further clarify:

  • the condominium’s requirement to maintain insurance on condo units
  • what the condominium corporation’s insurance does not cover
  • the types of additional insurance condominium corporations may impose on owners, and
  • claim back on insurance deductible from owners.
Clarification on condo unit insurance

Under the new regulations, the amount of insurance that a condominium corporation must have on condominium units depends on the type of unit. For example, condominium corporations must, at a minimum, place and maintain the following amount of insurance:

Type of unit Amount of insurance
Residential units on the parcel (other than those owned by the developer) Replacement value of the units and of the fixtures and finishing in the units (as described in the standard insurable unit description OR SIUD)
Residential units on the parcel owned by the developer Replacement value of units and of the fixtures and finishing as they existed at the time of the condominium plan’s registration
Non-residential units on the parcel used in connection with a residential purpose (e.g., parking spaces and storage units for owners) Replacement value of the units and of the fixtures and finishing, as were typically provided to purchasers by a developer
All other non-residential units on the parcel The replacement value of the units, excluding the replacement value of any fixtures and finishing in the unit
Units on the parcel owned by the corporation The replacement value of the units and of the fixtures and finishing in the unit

 

A corporation can increase the amount of insurance for residential units on the parcel (other than those owned by the developer) to reflect a higher replacement value. This may happen if there are variations from the standard insurable unit descriptions.

… the amount of insurance that a condominium corporation must have on condominium units depends on the type of unit.Going hand in hand with the clarification on condo unit insurance, we now have a legislative definition for the standard insurable unit description (SIUD). A SIUD is a description that developers give to purchasers. The condominium corporation can also adopt one if there isn’t one in place. A SIUD consists of typical standard fixtures and finishing in a residential unit or class of residential units.

A SIUD must include a description of the typical features in the unit(s). For example:

  • Floor coverings, wall coverings and ceiling coverings
  • Electrical lines and fixtures (includes lighting fixtures)
  • Plumbing lines and fixtures
  • Natural gas lines and fixtures
  • Air exchange and temperature control fixtures
  • Walls that do not form the unit’s boundaries, and any windows/doors located in those walls
  • Cabinets and counter tops
  • Non-chattel appliances.

TIP: If you are a condo purchaser or owner and looking for the SIUD, you can ask your condominium corporation. Upon receiving the request, the corporation has 10 days to provide it to you.

Corporation’s insurance does not extend to improvements

Unless required by the corporation’s bylaws, a corporation’s insurance does not extend to any improvements made to the units by the owners. For residential units, improvements do not include any property included in the standard insurable unit description. For non-residential units, improvements do not include any fixtures and finishing that must be insured by the corporation.

Additional insurance requirements on owners

The new regulations make it clear that condominium corporations can now impose additional insurance requirements on owners. For example, a corporation may, by bylaw:

  • require owners to purchase insurance for deductibles that may be payable to a corporation
  • specify the particulars of deductible insurance to be purchased, and
  • specify the proof an owner must provide the corporation of purchased insurance.
Claim back on insurance deductible

An insurance deductible is money that an insured must pay before the insurer will pay out any expenses for a claim. Under the new regulations, if damage for a claim originates in or from an owner’s unit (or owner’s exclusive possession area), then the condominium corporation can claim back an insurance deductible from the owner, up to a maximum of $50,000.

A SIUD is a description that developers give to purchasers.In such a situation, the owner is “absolutely liable” to the corporation on demand by the corporation. This means that whether or not there was any proven negligence, the owner is liable for the corporation’s deductible.

For example, there is water damage to a condominium building that came from an owner’s unit. The condominium corporation can only make the owner liable for the deductible limit up to $50,000. If the deductible is $10,000, then the owner is liable for $10,000. But if the deductible is $60,000, then the owner is only liable for $50,000 (the maximum amount).

That said, there are situations where an owner is not liable for the deductible. For example, if the claim arose from:

  • a defect in the construction of the owner’s unit or exclusive possession area
  • damage due to an act or omission of the corporation, board member, officer, employee or agent of the corporation (or any combination of them), or
  • normal structural deterioration of the common property, managed property or real property, other than the property that the owner was responsible for maintaining or repairing.
Tips for owners
  • Some insurance companies offer owners deductible coverage that will help pay for the corporation’s deductible. Check with your insurance representative to discuss this type of coverage. It is prudent to request to add coverage.
  • If you already have deductible coverage in your unit owner’s policy, it is prudent to adjust your deductible coverage accordingly.
  • You can ask your board, manager or corporation’s insurance broker for a copy of the corporation’s Certificate of Insurance, which outlines current deductible amounts.

To learn about the latest changes to Alberta’s Condominium Property Act and Regulation, go to our website: www.condolawalberta.ca.

Authors:

Judy Feng
Judy Feng
Judy Feng, BCom, JD, is a staff lawyer at the Centre for Public Legal Education Alberta. The views expressed do not necessarily reflect those of the Centre.
 


A Publication of CPLEA