the decision to self - insure any losses up to that threshold. In this article, by self - insurance, I am not speaking about circumstances where the condo corporation does not have any insurance policy in place. It is the author ’ s opinion that, where insurance is available, the condo corporation must meet its obligations under sections 39, 99 and 102 of the Act as well as the condo corporation ’ s declaration. If a condo corporation is unable to obtain or maintain that minimum level of insurance (i.e. insurance is terminated or not readily available), the board of directors must immediately notify unit owners through an information certificate update (ICU). If a condo corporation finds itself unable to obtain any insurance, the board should contact a condo lawyer to develop a plan for navigating this precarious situation.
Self - insurance and High Insurance Deductibles
There are benefits to choosing a self - insurance strategy, particularly in a hard insurance market where premiums are increasing dramatically. Many condo corporations are opting for insurance policies with a higher deductible to keep premiums lower. This reduces the corporation ’ s expenses and, where comprehensive insurance deductible by - laws are in place, the condo corporation can expand and clarify the circumstances where a unit owner must pay the deductible. Although some boards may voluntarily choose a higher deductible, some condo corporations have found themselves unable to obtain any insurance without agreeing to very high insurance deductibles. Ultimately, a variety of circumstances may force the corporation to rely on self - insurance for claims below a threshold (being the lessor of the cost of repair or the insurance deductible). While there are benefits to self - insurance, there are also risks that condo corporations must consider, including: 1. The condo corporation may underestimate its exposure to risk and in turn, may not set aside sufficient funds to cover property damage and/or damages arising from liability. For example, a condo may see several insurable losses within a year and if the deductible is $50,000 or $100,000, this may place a significant burden on the condo corporation; 2. If the corporation is liable for the costs and has not set aside sufficient funds, the corporation will have to make unanticipated expenditures from the operating or reserve fund, borrow funds or levy a special assessment against unit owners; and 3. If the corporation has an insurance deductible by - law, the unit owner may be responsible for the cost of the insurance deductible or the cost to repair the damage, whichever is lesser. This provides protection
CCI Review 2020/2021 —June 2021 - 11
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