The Real Cost of Insurance

You're a homeowner, you likely pay your home insurance premium on a monthly basis, you have not had any claims so your premiums are reasonable until they are not.

In a high-rise condominium, a bidet had been installed incorrectly by the home-owner. One night, while residents slept, it failed.

By morning, water had travelled down 16 floors. Some residents were woken by neighbours knocking on their doors. Others woke up to soaked carpets, ceilings dripping fast or slow, pockets of water trapped between the drywall and paint, and trim pulling away from the walls.

The repairs came to more than $200,000. The condominium corporation's insurance covered the claim, but its deductible was $75,000.

Under Ontario's Condominium Act, 1998, when damage to a unit is caused by an act or omission of its owner or occupants, the lesser of the repair cost and the corporation's insurance deductible is added to that unit's common expenses. A corporation's by-laws can extend this to other situations. So, the $75,000 fell on the owner of the suite where the leak began.

Many owners assume their personal condo insurance will cover this. Often, it doesn't, or not in full. Coverage for a corporation's deductible, sometimes called deductible or loss assessment coverage, is frequently capped well below what the building's deductible actually is. This owner's policy didn't match the corporation's $75,000 deductible, so they had to take out a loan to pay it.

Aqua Meter wasn't there to save the day or the headaches, but it could have been.

When the building went up, the developer chose not to sub-meter water. It's an understandable decision. With many sub-metering providers, the admin fees can cost residents more than the water they use. But skipping sub-metering also meant skipping leak detection, and that cost everyone.