Two policies, one building

Every conventional condominium in Alberta operates with two layers of insurance. The first belongs to the corporation. It typically covers the buildings and common property: the structure, the roof, the hallways, the elevators, the parkade and, in most conventional buildings, the units themselves as they were originally built. The premium for this policy is paid collectively through your monthly condo fee, which is one reason the fee should never be compared to zero.

The second layer belongs to you. A unit owner’s policy, sometimes called condo owner’s insurance, is designed to pick up precisely what the corporation’s policy leaves out: your belongings, upgrades made inside the unit, your personal liability, your living costs if the unit becomes uninhabitable, and your share of certain losses that the corporation charges back to owners. The two policies are meant to fit together like floorboards. The gaps appear when an owner assumes the corporation covers something it does not.

Where the line sits between the two is not the same in every building. It is defined by the corporation’s insurance policy, its bylaws and the standard it insures units to, which is why the document review that accompanies buying a condo after selling your house should always include the corporation’s insurance certificate. Your broker will ask to see it; if they do not, offer it anyway.

What the corporation’s policy is for

The corporation’s policy exists to rebuild the building. In broad terms it responds to damage to the structure and common property, and in most conventional buildings to the units as originally constructed: the walls, the floors, the fixtures the developer installed. Many corporations describe this benchmark as the standard unit or by reference to original specifications, and the precise definition matters a great deal, because anything above that benchmark generally becomes the owner’s responsibility to insure.

Two practical points follow. First, the corporation’s policy is not yours: you cannot rely on it for your belongings, your upgrades or your liability, and you have no control over its deductibles. Second, the policy changes. Corporations renew their insurance annually, and coverage terms and deductibles can move meaningfully from one year to the next. A building whose documents you reviewed at purchase may carry different deductibles two renewals later, which is why the corporation’s current certificate of insurance is worth requesting each year and sharing with your own broker at your own renewal.

What your unit owner’s policy needs to do

A unit owner’s policy is usually built from a handful of coverages, and each one answers a specific question a downsizer should be asking.

• Contents. Your furniture, clothing, electronics and household goods. The corporation insures the box; you insure what is in it.
• Improvements and betterments. Anything inside the unit that goes beyond the standard the corporation insures to. More on this below, because it is the coverage downsizers most often underestimate.
• Personal liability. Your responsibility if someone is injured in your unit or if something originating in your unit, such as an overflowing appliance, damages a neighbour’s unit or the common property.
• Additional living expenses. Your accommodation and related costs if a covered loss makes the unit uninhabitable while repairs proceed.
• Deductible assessment and special assessment coverages. Protection for amounts the corporation can charge back to you, discussed in the next section, because in Alberta this has become one of the most important parts of the policy.

Which coverages are included, at what limits, under what conditions and with what exclusions varies by insurer. This is exactly the conversation to have with a licensed broker rather than a comparison website, and it is worth having before you waive conditions on a purchase, not after possession.

The deductible assessment: the risk downsizers have not met before

Here is the mechanism that surprises nearly every former house owner. When the corporation’s policy responds to a loss, the corporation pays its deductible. Alberta’s condominium legislation and most bylaws allow the corporation, in certain circumstances, to recover that deductible from an owner, most commonly when the loss originated in that owner’s unit. Water is the classic example: a failed washing machine hose in your unit can damage several units below, the corporation’s policy responds to the building damage, and the corporation’s deductible for water losses can be charged back to you.

Corporation deductibles, particularly for water, have risen substantially across Alberta in recent years, and in some buildings they are large enough that an uninsured chargeback would be a serious financial event. This is why deductible assessment coverage exists within unit owner policies, and why its limit should be chosen deliberately rather than by default: the sensible starting point is to know the corporation’s current deductibles, from its certificate of insurance, and to ask your broker to confirm in writing that your limit is adequate against them. Because the corporation’s deductibles can change at its renewal, this check belongs on your annual renewal routine as well, not only at purchase.

A related coverage responds to special assessments levied because of an insured loss, where the corporation’s insurance proves insufficient. It is distinct from deductible assessment coverage, the conditions attached to it vary considerably, and it does not cover assessments for ordinary repairs or reserve fund shortfalls. Your broker can explain what the version offered to you actually responds to.

Improvements and betterments: the renovation you did not do

Improvements and betterments coverage insures the difference between the unit as the corporation covers it and the unit as it actually stands. The subtlety is that this includes renovations done by previous owners. If the unit you buy has an upgraded kitchen, hardwood in place of original carpet, or a renovated bathroom, those upgrades are generally yours to insure from the day you take possession, whether or not you know exactly when they were done.

For downsizers this matters because the well renovated unit is often precisely the one you chose. The practical step is straightforward: walk the unit with fresh eyes, list everything that appears to go beyond original condition, estimate what it would cost to replace, and give that number to your broker so the limit is set on purpose. If the corporation’s insured standard is defined in a standard insurable unit description, ask for it; it makes this conversation far more precise.

Contents after a house: less volume, different questions

Downsizers often assume their contents coverage question is simply smaller than it was in the house. Mostly it is: a serious decluttering genuinely reduces what needs insuring. But three wrinkles deserve attention. Items of particular value, such as jewellery, art, instruments or collections, often carry sub limits within standard contents coverage and may need to be scheduled individually; the move is the natural moment to update appraisals and have that conversation. Belongings kept in a storage locker, in the parkade or in an off site storage unit during the transition may be treated differently from contents inside the unit, so tell your broker where things actually are. And if your new home will sit empty for weeks at a time, perhaps because the point of the move was lock-and-leave travel, ask specifically what the policy requires while you are away, and get the answer in writing.

One further note for villa buyers: not every complex marketed as a villa is a conventional condominium, and in some structures the owner’s insurance responsibilities extend to the building itself. The corporation’s documents state which structure you are buying into; review them with your lawyer and make certain your broker knows before the policy is written.

Seven questions to bring to your insurance broker

Bring the corporation’s certificate of insurance, the bylaws and any standard unit description to the conversation, and work through these questions together.

1. What standard does the corporation insure units to, and what does that leave for my policy to cover?
2. What are the corporation’s current deductibles, including for water, and does my deductible assessment limit cover the largest of them?
3. How should the improvements and betterments limit be set, given the renovations already in the unit?
4. What does the special assessment coverage in this policy actually respond to, and what does it exclude?
5. Do any of my belongings need to be scheduled separately, and are items in storage covered during the move?
6. What does the policy require if the unit is unoccupied for an extended period, and can I have that in writing?
7. What should I re-check at each renewal, both mine and the corporation’s?

Where this fits in the downsizing decision

Insurance rarely decides whether downsizing is right for you, but it belongs in the full accounting. For many downsizers the overall insurance picture improves with the move; the point is not that condo insurance is a burden, but that it is different, and that the differences reward an hour of attention before possession day. If you are weighing the broader move from a house, the changes to daily life are covered in our guide to moving from a house to a condo, and the transaction itself, including the document review where the insurance certificate first appears, is covered in buying a condo after selling your house. For the complete picture of the journey, start with our Calgary downsizing guide.

Frequently asked questions

Is condo insurance mandatory in Alberta?

The corporation is required to insure the building, and owners pay for that collectively through fees. A unit owner’s policy is not required by legislation in the way vehicle insurance is, but mortgage lenders commonly require it, some bylaws require it, and going without it leaves your contents, upgrades, liability and deductible chargeback exposure entirely uncovered. Practically, every owner should carry one; ask a licensed broker to confirm what applies in your building.

What is a deductible assessment?

When the corporation’s insurance responds to a loss, the corporation pays a deductible, and in certain circumstances it can recover that deductible from the owner connected to the loss, most commonly when the loss originated in that owner’s unit. Deductible assessment coverage within a unit owner’s policy is designed to pay that chargeback up to its limit, which is why the limit should be set against the corporation’s actual deductibles.

Does the corporation’s insurance cover my renovated kitchen?

Generally not, if the renovation exceeds the standard the corporation insures units to. Upgrades beyond that standard, including those made by previous owners, typically fall to the unit owner’s policy under improvements and betterments coverage. The corporation’s insured standard is defined in its documents, and your broker can set the limit once you know it.

How does insurance change when I move from a house to a condo?

In a house, one policy covers structure, contents and liability. In a condominium the structure is primarily the corporation’s to insure, and your policy covers contents, upgrades, liability, additional living expenses and assessment chargebacks. The premium is typically lower than a house policy, but the policy has more moving parts that must be matched to your specific building, which is why the corporation’s insurance certificate and bylaws belong in your broker’s hands.