Reducing risk: Recent change to condominium insurance regulations could benefit Alberta owners

A recent change to the Condominium Property Act in Alberta could be good news for condo owners who might otherwise face a huge expense thanks to building damage caused by a problem in their unit.

Laurie Kiedrowski, a partner with McLeod Law and head of its condominium law group, says the change, which took effect on Jan. 1, allows condo corporations to charge back the corporation's insurance deductible to the owner of a unit where the damage originated.

That may not sound like a positive thing, but Kiedrowski says the regulation limits the amount to a maximum or $50,000, even though some condo corporations have a six-figure deductible.

"This is not a bad thing at all," she said.

Bernice Winter, owner and president of Condo Check, agrees.

She says most condos already had a bylaw allowing condo corporations to go after individual unit owners to recoup the corporation's deductible, which in some Calgary buildings is up to $200,000.

"I think most owners have not been aware that they were at risk with that, so the attention this is getting is now making owners aware, which is also a good thing." - Bernice Winter, Condo Check

"This new legislation caps it, so it's a good thing," she said.

As an example, Winter cites an incident in a highrise condo building where an owner damaged a sewer line, which led to flooding across multiple storeys. They were held responsible for the condo corporation's full $80,000 insurance deductible.

"I think most owners have not been aware that they were at risk with that, so the attention this is getting is now making owners aware, which is also a good thing," she said.

Winter says the personal condo insurance that an owner should buy will typically have coverage for a situation where an owner is stuck paying the corporation's deductible after an incident.

However, as some condos in Alberta grapple with skyrocketing insurance policy costs that also include large increases in the corporate deductible, she says owners should get a copy of the corporation's policy to ensure their own condo insurance will cover the deductible up to the new $50,000 cap.

Kiedrowski says another example of the benefit of the new regulations would be for owners in a small condo development.

For example, consider a condo complex with four homeowners. Without the corporation being able to charge one owner for a deductible of $5,000 from a damage claim, all four owners would eventually pay $1,250 more through higher condo fees, as the money must come from somewhere.

Now the corporation could charge the at-fault owner the full $5,000, of which the owner's insurance will pay all but their policy's deductible, which might be only $500.

"It's far better to spread the loss between the insurers," said Kiedrowski.

Winter adds that avoiding damage in the first place is always the best strategy, so condo owners should check drains, tubs, shower heads, washing machine hoses and even simple toilet seals to make sure everything is functioning properly.

"They really need to maintain their units, (especially) the plumbing," she said. "They're responsible for that."