Audrey Loeb Partner Shibley Righton LLP
E. Rudy Petershofer Director, Operational Compliance Crossbridge Condominium Services
Insurance
The Looming Condominium Insurance Crisis How to Reduce the Risk Of Damage and Insurance Claims in Condominiums
While many continue to petition the government of Ontario to step in and address the looming condominium insurance crisis, there are practical solutions that condominium corporations can deploy to reduce the likelihood of major floods. It is important to remember that without a good insurance deductible provision in the corporation’s bylaws, the deductible will, in most cases, be paid by the corporation and this can have a serious impact on the corporation’s finances. This article is intended to offer some suggestions on what a board of directors can do to reduce the risk of damage in the building.
Several companies are now supplying water detection systems that can detect leaks as they occur, alert corporation staff, and more importantly, shut off the water to minimize the damage. If water detectors were installed, major floods could be avoided and replaced with a simple clean-up effort at a cost well below the corporation’s insurance deductible limit. While there can be a significant up-front cost for these systems, they can easily pay for themselves if they prevent even one major flood. Corporations should be doing annual fire inspections for smoke alarms and carbon monoxide detectors. Combining these annual inspections with the inspection of “unit” components that most frequently cause flooding or fire, including washing machine hoses, HVAC’s, dishwasher hoses and dryer lint traps, would give corporations an opportunity to prevent damage and costly claims, which may fall within the deductible amount. The corporation could also inspect the toilets
and faucets in sinks and tubs to determine if there are any leaks, which could be causing higher than necessary water bills. While these are generally unit components, for which the owner is responsible, a corporation can, if it follows the correct procedures and the governing documents do not prohibit same, choose to inspect them regularly to determine if they are in good repair. Before beginning an inspection program, there are additional matters that should be considered with the corporation’s legal counsel, including: 1. what form of notice of the inspection program will need to be given to the owners; 2. whether modifications to governing documents are required; 3. a determination as to who is qualified CONDOVOICE SUMMER 2021
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ILLUSTRATION BY MIKE CHERKAS
As many in the condominium industry are aware, condominium insurance premiums and deductible limits are rising at an alarming rate. The frequency of floods, and the significant damages that can result, are one of the driving forces behind these steep increases.
