The condo deductible time bomb

Condo owners are insured twice — by the corporation's master policy and by their own unit policy — and the seam between them has quietly become one of the most expensive gaps in Canadian home insurance.

The mechanism

When a major loss hits the building, the corporation's insurance pays, subject to the corporation's deductible. To keep premiums manageable as claims have risen, corporations have pushed those deductibles up — into the $50,000 to $250,000 range in many buildings. Two things can then land on individual owners:

• A loss assessment — your share of a shortfall when the corporation's coverage isn't enough.
• A deductible chargeback — where a loss that started in your unit gets you billed the corporation's whole deductible.

The fix is specific and cheap

The fix relative to the risk is small: loss-assessment coverage and deductible-chargeback coverage on your unit policy, sized against your building's actual deductible. Most owners either don't have enough or don't know the number.

So do two things this week: pull your corporation's master-policy summary and find its deductible, then check that your unit policy's loss-assessment limit is at least that large. Add it to your Policy Beast binder and the condo gap rules will flag it if you're short.