Condo Insurance and Water Damage
I am presently a holder of Condo package from a company in Richmond/Vancouver, BC. My problem is that our condo bylaws are changing and will be downloading responsibility to individual owners for accidental water damage caused by leaky hoses, etc. I've sent you a copy of the proposed by-law.
Does a standard insurance policy cover all damage caused by misadventure, say a broken diswasher hose, that causes damage to other suites in the building? This type of damage was, I believe, covered by condominium corporation's previous policy, but is now being downloaded onto the owners to save money.
Answer: Unfortunately, water damage issues in condos (especially where units are "attached" and share common walls and / or ceilings / floors) are a very tricky area. While I can advise you to be very careful to get the most comprehensive water damage coverage possible on your individual policy("flood", broken water pipes, "misadventure" and water entering your unit from another unit), you still could find yourself in a problem with a claim against a neighbor if this change goes through.
Fundamentally, my experience is that if two insurance companies are involved, they will simply each refuse to pay. This is what happens when the water damage coverage is the responsibility of unit holders -- you will have at least two insurance companies involved in any claim of water damage where it moves from one unit to another. In fact, you could have more than two insurers, since the corporation's insurance company will still be involved, even if the coverage is downloaded, because the unit holder's insurance will often first suggest that the corporation's insurance should pay. I've seen this more than once while on a condominium board of directors for over 10 years.
The advantage of your condominium corporation having the comprehensive water damage coverage is that it's one insurance company providing the coverage for the whole complex, and therefore there is only one possible payor --- not two or more. Also, if the damage is covered for the complex, regardless of the origination of the water, this ensures that there is no question of coverage. However, it could get tricky for water damage inside a unit, which is likely where the corporation was finding that it was costing a lot of money.
Personally, I think it is a bad deal to download to the individual units, although there are arguments in both directions. I don't think that the condo corporation benefits in the long run, even if money is saved at the level of the complex. After all, the corporation is the sum of the unit holders, and the money is still coming out of unit holders' pockets. Since each unit holder is a "share holder" in the corporation, I would advise you to vote against this proposition, if you have the opportunity. If not, I'd take steps to get it rescinded for next year.