LEGAL CORNER
UNDERSTANDING INSURANCE DEDUCTIBLES STORY SUBMITTED BY MICHAEL GIBSON CONDOMINIUM LAWYER - MILLER THOMSON LLP
In In January January 2020, 2020, Alberta Alberta introduced introduced new new provisions provisions of of the the Condominium Condominium Property Property Regulation, Regulation, shedding shedding light light on on insurance insurance obligations obligations between between unit unit owners owners and and their their condominium condominium corporations. corporations. One One significant significant change change revolved revolved around around insurance insurance deductibles. deductibles. Absolute Liability for Unit Owners Previously, when a condominium corporation suffered a loss, they paid the insurance deductible and then sought to recover it from the owner responsible for the loss. However, under s. 62.4 of the Condominium Property Regulation, this is no longer the case. Now, if a condominium corporation pays an insurance deductible for a loss originating in an owner's unit or exclusive use area, the owner is absolutely liable for that deductible. Absolute liability implies that the owner is held responsible solely based on the proof of the loss originating in their unit, regardless of any negligence. Moreover, this deductible chargeback may even be secured against the owner's unit if the condominium bylaws permit. But there's a limit: the law caps an owner's liability
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for deductible amounts at $50,000. While owners are "absolutely liable" for deductible costs in their units, they can't be held accountable for more than $50,000. This limitation shields unit owners from excessive financial burdens arising from unforeseen events.
A Developing Practice Since these changes to the law on insurance in condominiums, a practice has emerged in which owners' insurers may opt to pay up to the $50,000 limit, even if no claim is made by the condominium corporation. This practice offers condominium corporations flexibility, allowing them to collect up to the maximum chargeback amount against the owner of the unit where the loss originated without necessarily filing an insurance claim. Though this is still a developing practice and should not be taken as a given.
