Condo Insurance: Separate the Syndicate Policy From Yours

Locate the boundary between the two policies

Insurance in divided co-ownership rests on two complementary contracts. The syndicate's policy covers the building as a whole, meaning the structure and common portions, and the units in their original state, as delivered by the builder or defined by the declaration of co-ownership. Your personal policy takes over in three areas: your movable belongings, your civil liability and the unit's improvements, which is everything beyond the original state. You will find the exact boundary in the declaration of co-ownership, which defines the reference state, and in the syndicate's certificate of insurance. Request both documents at purchase and keep them. They show where the collective coverage ends and where yours must begin.

Price the improvements, inherited ones included

The unit's improvements fall to your policy, and their definition is surprising: everything beyond the original state counts, including previous owners' work. The kitchen redone before your purchase, the replaced floors and the renovated bathroom are improvements you must insure, even though you paid nothing for that work. Do the valuation at restoration cost: what would it cost to redo those improvements after a loss, at current prices? Your policy's improvements limit, often modest by default, is compared with that figure and adjusted. The premium difference is minor. A unit bought renovated often carries tens of thousands of dollars of improvements that the new owner cannot see. A loss makes them very visible.

Cover the syndicate's deductible

The syndicate policy's deductible routinely reaches tens of thousands of dollars. In a loss, what happens to it depends on the declaration of co-ownership and the circumstances: it can be shared among co-owners, or claimed from the co-owner whose unit caused the damage. A water leak starting at your water heater could therefore earn you the bill for the entire collective deductible. Personal policies offer specific protection for that eventuality, at the limit you choose, for a few dollars a month. Calibrate it to the syndicate's actual deductible, a figure found on the certificate of insurance that tends to rise, as syndicates raise their deductibles to contain their premiums. Redo this check at each syndicate renewal, not only your own.

Own your liability as a co-owner

A co-owner's civil liability has its own scenarios: damage caused from your unit to other units and the common portions, such as a kitchen fire that spreads or a water leak that descends into the neighbours' unit below, as well as liability as a member of the collectivity under the applicable rules. Your personal policy's liability section covers these scenarios up to its limit, two million dollars being common. Then there is the syndicate's democratic life, which touches your coverage indirectly: the required contingency fund and self-insurance reserve, and the meeting decisions on the collective policy and its deductible. Follow those decisions, with meeting minutes in hand, and reread the two contracts together at renewals. The two policies make sense through each other, never in isolation.

Checklist

• ✓Request the syndicate's certificate of insurance
• ✓Obtain the declaration of co-ownership
• ✓Locate the boundary between the two policies
• ✓Price the unit's improvements, inherited ones included
• ✓Adjust your improvements limit accordingly
• ✓Cover the syndicate's deductible
• ✓Verify your co-owner civil liability
• ✓Reread both contracts together at renewals
• ✓Follow meeting decisions about insurance