Wicked Leaks: The Condo Story

Tips for your condo-owner clients at risk of water damage

The recent flood of Toronto’s Union Station brought to mind that water can bring serious damage almost anywhere. Clients with condos may think they are well above the deluge, but the smart broker knows better.

Even clients on the 28th floor can experience flood damage. All it takes is a roof leak, an owner above them with a plumbing problem, overflowing bathtub, leaky dishwasher or even a fire that sets off the sprinkler system.

Read: Condo coverage must be customized to needs

Condo owners may also think they are protected by their condo corporation. However, many are unaware of where their responsibility starts and the corporation’s ends.

Counsel your clients to be well protected. But counsel them also to challenge their condo association’s coverage. It is in their best interest to make sure the association has adequate protection from water damage or every owner will have to contribute to cover the damage costs to common areas. Whether it is in their unit or not.

Read: The “leaky condo” problem today

Your clients should insist that their condo associations are well covered for water damage to avoid special assessments becoming their responsibility. You can help them avoid these gaps. Have your client request a copy of the condo association’s coverage to review with you as part of preparing their coverage and review the common areas that may be susceptible to water damage, party rooms, swimming pools and so forth.

Read: Protecting clients using home-exchange services

Reducing the risks of water damage loss proactively also makes sense. A good start is to prepare a brief preventative check list for your client to review with their condo association.

•The condo association should make sure plumbing lines and systems are regularly maintained and inspected.

•Exterior walls, roofs, balconies and even parking structures should be inspected regularly to detect any early deterioration to avoid costly repairs and losses created by leaks.

•Mechanical equipment, including sprinkler systems, should have regular maintenance and inspection.

Read: 4 condo building trends and related liability issues

There are key areas to ensure your clients are covered for water damage in their own unit after reviewing the condo association coverage. Common gaps include:

•The unit-owner almost always has to seek alternate living arrangements, sometimes over an extended period of time because of the number of parties involved in a loss and any potential legal disagreements that can delay repair.

•Contents can be one of the most underinsured lines of business in the personal insurance marketplace.

•Many features, such as flooring, moulding, cabinetry, appliances, lighting fixtures and carpets, can be considered additions and improvements and therefore may not be covered since condo insurance is often based on standard units as purchased from the developer.

•Insurance gaps are magnified in higher end units or condos with unique luxury finishes. These additions can sometimes add up to more than the cost of the condo itself.

•Consider coverage for unit-owner losses due to assessments for common area damages including the condo corporation deductible.

Toronto is said to have more condos under construction than anywhere else in North America. Other major Canadian markets are also showing increased growth in condo development.  As the number of condo owners increases, more owners will need guidance to make sure that both their condo and their coverage have no leaks.

Marilyn Horrick is Assistant Vice President, Chubb Personal Insurance, Chubb Insurance Company of Canada.* For more of Marilyn’s writing, click here.

*The views, information and content expressed herein are those of the author and do not necessarily represent the views of Chubb Insurance Company of Canada or of any of The Chubb Group of Insurance Companies. The information provided should not be relied on as legal advice or a definitive statement of the law in any jurisdiction. For such advice, you should consult your own legal counsel.

See also:

Stemming water claims

Rain barrels can help reduce home water damage

Small leaks equal big losses



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