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Understanding condo insurance

First posted: Thursday, September 05, 2013 03:36 PM EDT

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Terry Poulton

Special to QMI Agency

To gauge their understanding of property insurance, Allstate Insurance Company of Canada recently surveyed hundreds of Ontario condo owners, plus people who planned to buy condos.

The widespread lack of knowledge that was revealed was shocking, according to agency manager Jason Foroglou.

Most disturbing, he says, was that a whopping 61% of respondents were clueless about the gap between what's covered by their condominium buildings' insurance and what they're personally responsible for.

"A lot of people think, 'well, the condo corporation has an insurance policy that covers the whole building, and insurance is part of my monthly maintenance fee, so I'm fine,'" Foroglou explains.

"But," he continues, "the reality is that condo owners, not the condo corporation, are liable if, say, they cause a fire that damages nearby units with smoke and water from extinguishing the fire. That could be very costly, so condo owners must protect themselves by having adequate insurance of their own."

To raise awareness about the realities of safely insuring condos, Allstate came up with the Condo Hero Contest.

With an underlying theme of feeling safe and taken care of, the contest offers condo owners the chance to nominate security guards, concierges and other management personnel for outstanding performance. The contest closes on September 27 and the prize is $5,000, to be split evenly between the winning nominee and nominator.

All Condo Hero entries will be judged by celebrity realtor Brad Lamb, Allstate president/CEO John O'Donnell, and Linda Pinizzotto, a realtor with Sutton Group Realty, as well as founder and president of the Condo Owners Association (COA).

Pinizzotto points out that, while the contest may be lighthearted, the reasons it was concocted are anything but. Then she names some nightmare scenarios she says too few condo owners prepare for.

"I've been president of two condo boards for 17 years," says Pinizzotto, "and in my opinion, almost 50% of condo owners don't understand the financial risk of not having appropriate insurance coverage on their units -- or that certain parts of their units are covered by the building's insurance, but an awful lot aren't.

"Say you're cooking and you drop grease on the floor and a visitor slips and gets injured," she continues. "You're accountable, but you may not be insured for that.

"Or if you're renting to a tenant who leaves the water running in the bathtub and it overflows and goes eight floors below. If you don't have insurance to cover repairing the damage in every unit affected, you're going to have to cover the costs, not only for the unit owners and the tenants, but also for the condo corporation if common elements were also damaged."

Pinizzotto strongly recommends that condo owners carefully read the official declarations provided by their buildings' management team, and also be aware of subsequent changes to the terms of the declaration, including insurance coverage.

"Here's what can happen," she explains. "Say you've bought a basic unit and the building's insurance policy covers floor coverings. You decide to upgrade your floor coverings, but that upgrade is not covered.

"Or," Pinizzotto continues, "your board decides years later that they're not really happy with their insurance deductibles being so high. So they drop floor coverings from their policy, and they may or may not inform condo owners."

Foroglou says he hopes the Condo Hero Contest will help raise awareness of such issues, adding that: "Often in the insurance field there's a lot of doom and gloom; we're trying to cheer people up as they learn more about condo insurance."

Details about the contest can be found at: www.allstate.ca/CondoHero