Condo Corporation Insurance in Ontario: What Every Board Must Understand

What Section 99 of the Condominium Act Requires Your Board to Insure

Under Section 99 of the Condominium Act, 1998, every Ontario condo corporation is legally required to obtain and maintain insurance covering two things: the common elements and the standard units. This is not optional. The policy must never lapse, and the coverage must extend to a defined list of “major perils.”

Major perils under the Act include fire, lightning, smoke, windstorm, hail, explosion, water escape, strikes, riots, civil commotion, impact by aircraft or vehicles, and vandalism or malicious acts. Many boards go beyond this minimum with an “all-risk” policy, which provides broader coverage and is generally recommended for most buildings in London and Sarnia Ontario. This is not legal advice, but generally speaking under Ontario law, failing to maintain the required insurance is a breach of the board’s obligations and can expose the corporation — and potentially individual directors — to significant financial liability.

What the corporation does NOT need to insure under Section 99 are improvements made by individual unit owners to their units. If an owner renovated their bathroom with custom tile and in-floor heating, your policy is not required to cover that work if it’s damaged. This distinction matters enormously when a claim is filed — and it is the main reason that both a clear standard unit bylaw and individual unit owner insurance are essential to a well-functioning condo corporation.

The Standard Unit Bylaw: Why It’s One of the Most Important Documents Your Board Owns

The standard unit bylaw — sometimes called a “standard unit definition” — establishes exactly which elements of a unit the corporation considers its responsibility to insure and repair, and which belong to the owner. Think of it as the line that separates corporation responsibility from owner responsibility. Without a current, clearly written standard unit bylaw, you are inviting disputes every time a claim is filed.

A typical standard unit definition includes the unit’s original structural elements: walls, doors, windows, flooring, and standard fixtures like plumbing and electrical as originally installed. What it generally does not include are owner-added upgrades — the hardwood floors an owner installed over original carpet, the custom kitchen cabinets, or the pot lighting added after purchase. When a water escape event damages a unit, the corporation’s insurance covers the standard unit; the owner’s personal insurance is responsible for their improvements.

London Ontario boards working with Sapphire have often come to us mid-dispute — after a major claim — only to discover their standard unit bylaw hasn’t been reviewed in years and no longer reflects the actual finishes in the building. Keeping this document current isn’t a formality; it’s what allows your insurance to function as intended. Consider the following checklist:

•       Review your standard unit bylaw every 3–5 years, or after major common element renovations

•       Ensure the bylaw reflects what a typical unit looked like when the building was originally completed

•       Communicate the standard unit definition to all owners so they know what they need to insure separately

•       Consider updating the bylaw if units across the building have been significantly upgraded over time

For more on the financial decisions boards must make that intersect with insurance, read our guide: How Much Should We Contribute to the Reserve Fund

How Deductibles Work — and Who Pays When There’s a Claim

Condo corporation insurance deductibles in Ontario can range from a few hundred dollars to tens of thousands, and they are the source of more owner disputes than almost any other insurance-related topic. Understanding who is responsible for the deductible — and under what circumstances — is something every board member must be clear on before a claim occurs.

The general principle under Ontario’s Condominium Act is that a unit owner can be charged the corporation’s insurance deductible when their negligence, or the negligence of a guest, caused the insured damage. This is not legal advice, but generally speaking under Ontario law, if a unit owner leaves a tap running that floods the hallway and the units below, the corporation can seek to recover its deductible from that owner. If the damage is caused by a building systems failure — a pipe behind a common wall, for example — the deductible is typically absorbed by the corporation.

Deductible bylaw provisions matter here. Many corporations pass bylaws that specify the exact circumstances under which an owner can be charged the corporation’s deductible, and the threshold amount. At Sapphire, we find that boards who have a clear, written deductible bylaw in place before a claim occurs deal with far less conflict — and far fewer threats of legal action — than boards who try to sort this out after the fact.

The practical takeaway for boards: know your deductible amount today, understand what triggers owner responsibility under your current bylaw, and communicate to owners what personal condo insurance they should carry to protect themselves from a deductible charge.

Directors and Officers Insurance: Personal Protection Every Board Member Needs

Property insurance is just one layer of protection your board needs. Directors and Officers (D&O) insurance protects individual board members from personal liability arising from decisions made in their role on the board. Condo boards make consequential decisions every week — about contracts, expenditures, bylaw enforcement, and owner disputes — and D&O insurance is what stands between a board member and a personal lawsuit when an owner disagrees with how something was handled.

D&O coverage is not required under the Condominium Act, but it is strongly recommended, and most experienced managers consider it an essential part of a condo corporation’s insurance program. Without it, unpaid volunteer board members are personally exposed to the financial risk of defending lawsuits — which is both unfair to those volunteers and a real deterrent to good people stepping up to serve.

If a contentious special assessment, a slip-and-fall on common elements, or a bylaw enforcement dispute leads to legal action, D&O insurance is what makes it possible for the corporation to defend itself without drawing down the reserve fund. For more on how unexpected costs like these affect your community financially, read:

What is a Special Assessment?

Your Annual Insurance Review: A Checklist for Boards

Insurance is not a set-it-and-forget-it item. Property values change, buildings age, common elements are upgraded, and inflation affects replacement costs. A policy that was adequate five years ago may leave your building significantly underinsured today — a situation called co-insurance — which can result in your insurer only paying a fraction of a valid claim.

Every year, before renewing your policy, your board should work through the following:

•       Has the replacement cost valuation been updated recently? Ideally every 3–5 years by a qualified appraiser

•       Are the common elements accurately described and reflected in current coverage limits?

•       Has the standard unit bylaw been reviewed and is it consistent with the policy?

•       Do you have liability coverage that reflects your building’s risk profile (amenities, parking, elevators)?

•       Do you have Directors and Officers (D&O) coverage for board members?

•       Are owners being reminded annually to carry their own unit owner insurance policy?

•       Has your deductible amount changed, and does your deductible bylaw reflect the current amount?

Insurance brokers who specialize in condominium corporations — rather than general residential brokers — are significantly better positioned to advise on this coverage. A specialist understands the Condominium Act requirements, the nuances of standard unit bylaws, and how to structure a policy that actually protects both the corporation and its owners.

For a broader look at the governance mistakes that frequently expose boards to avoidable risk, including insurance-related decisions, see:

Top 5 Mistakes Condo Boards Make (From a Condominium Management Expert)

Frequently Asked Questions

Q: What insurance is a condo corporation in Ontario legally required to have?

A: Under Section 99 of Ontario’s Condominium Act, 1998, every condo corporation must maintain property insurance covering common elements and standard units against major perils including fire, water escape, windstorm, and vandalism. The policy must never lapse. This is not legal advice, but generally speaking under Ontario law, the corporation is not required to insure owner improvements to units — those are the individual owner’s responsibility to insure separately.

Q: Who pays the condo corporation insurance deductible in Ontario when a unit causes damage?

A: It depends on your corporation’s deductible bylaw and the cause of the damage. If a unit owner or their guest caused the damage through negligence — such as an overflowing bathtub — the corporation can generally charge the deductible back to that owner. If the damage stemmed from a building system’s failure unrelated to any owner’s negligence, the deductible is typically absorbed by the corporation. The specifics depend on your bylaw provisions, which is why boards in London and Sarnia Ontario should have a clear, written deductible bylaw before a claim occurs.

Q: Do condo board members in Ontario need personal liability insurance protection?

A: Board members are not automatically protected by the corporation’s property insurance. Directors and Officers (D&O) insurance provides personal liability coverage for board members against claims arising from decisions made in their board role. While D&O coverage is not required under the Condominium Act, it is strongly recommended for all Ontario condo corporations to ensure that volunteer directors are not personally exposed to legal action arising from board decisions.

‍

Related Reading

→ How Much Should We Contribute to the Reserve Fund

→ What is a Special Assessment?

→ Top 5 Mistakes Condo Boards Make (From a Condominium Management Expert)