an event of damage to any unit(s) or the common elements which is caused by an “ act or omission ” of a unit owner or a person they are responsible for (like their tenant or tradesperson), whether the damage starts in their unit or somewhere else. The by - law can also define what “ act or omission ” means and move the standard closer to “ strict liability ” which is being liable simply because an event occurred. This prevents a legal battle about what someone did or did not do as in Lozano. “ Subrogation ” is the ability of an insurance company to sue in the name of the party they insure. A “ waiver of subrogation ” in a by - law is important to control costs by removing an insurance company ’ s ability to sue a condominium over a $10,000 insurance deductible where the insurance company disputes a condominium ’ s charge - back decision (like Lozano). Litigation is costly and complicated for a condominium. Finally, a by - law can help lower costs and premiums by setting insurance standards, that all unit owners and tenants have proper insurance coverage in place for the unit ’ s improvements, their personal property, and their living/business expenses. Maintenance Standards The Act allows a condominium to set maintenance standards through a by - law and having a clear and strong set of maintenance standards for unit owners to follow for their unit, their fixtures, and appliances, is another tool in preventing damage, establishing liability, and being clear about what a unit owner must do. This can include regular inspections and replacement of items that wear out and fail, to detect and prevent issues before they cause catastrophic damage. Maintenance standards can also resolve repair disputes where a lack of maintenance is the cause of the damage and could have been very helpful in the following case. Hopefully this information can assist you and your condominium(s) to control insurance costs and minimize insurance and damage - related risks. - GS
Standard Unit Where a condominium must repair a unit, repair costs and insurance premiums can be controlled through a well defined “ standard unit ” which classifies high wear, frequently upgraded, and high - cost items as “ improvements ” which a unit owner is responsible to repair and insure. This usually includes items like floor coverings, cabinets, counter tops, equipment, and appliances as “ improvements ” to a unit. It also sets the standards for replacement materials and can restrict these to “ builders ’ grade ” in order to further control costs. Insurance Deductible and Requirements There are four main components to a good insurance by - law, as this writer sees it, all of which lower the costs for a condominium: 1.Expand insurance deductible recovery (section 105 of the Act); 2.Setting the insurance deductible recovery standard closer to that of “ strict liability ” and rigorously defining what the words “ act or omission ” mean; 3.Waiving rights of subrogation; and 4.Setting insurance requirements for unit owners and tenants. Without a section 105 by - law, a condominium can only recover costs related to damage to a single unit which is caused by a person ’ s act or omission, the costs being the lower of the repair costs or the insurance deductible. Section 105 does not allow cost recovery where other unit(s) or the common elements are damaged (where the unit at issue sustains no damage) unless a condominium passes a by - law! With high deductibles and damage events (especially floods) easily spreading to other units and the common elements, a section 105 by - law is very important for cost recovery and insurance cost control. A section 105 by - law expands on the Act and allows a condominium to recover the lower of the insurance deductible or repair costs when there is
CCI Review 2021/2022 —September 2021 - 13
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