What to do when a condo you are renting out in Ontario is damaged
Damage to your condo while it’s being rented out can strike at any time, and oftentimes it’s out of your control and the tenant’s.
Who is responsible for the costs of the damage? It depends on the type of damage and the cause.
If you own the condo and rent it out to someone you are governed by Ontario’s Residential Tenancies Act (RTA), which you can read more about here, and the Condominium Act. Under the RTA, landlords are responsible for maintaining the condition of their rental unit. For damages outside regular wear and tear, caused by the tenant or their guests, the tenant is responsible for paying for the damage.
Water damage is one of the damages most commonly associated with condo units, as floods upstairs can often trigger water damage to units below.
If your condo has been flooded, you need to first notify the condo's property manager so they can determine where the water is coming from and immediately fix the problem. Talk to building management about the condo’s insurance policy and how it might apply to your unit.
Also, notify your insurance company and summarize any damages to the condo. Lastly, your tenant should notify their insurance company for any potential tenant insurance claims if their belongings are damaged. Either you or the tenant should take photos of the damage and record the date, time, as well as details on the damages.
Whether or not you decide to make a claim to your insurance likely depends on the extent of the damage. If the damage is extensive, e.g. greatly exceeds your deductible (aka the price you pay before your insurance company pays the rest), you may want to make a claim.
The different types of insurance and what they typically cover:
In these types of situations (depending on the extent of the damage) you could be dealing with three types of insurance:
1. Condo corporation’s insurance
Section 99 of the Condominium Act outlines that condo corporations are responsible for maintaining insurance for damages to units and shared spaces that are caused by major perils and by-law specific perils.
Examples of major perils include lightning, windstorms, fire, smoke, hail, water escape, explosions, riots/civil commotion, strikes, impact by aircraft or vehicles, vandalism or malicious acts.
Worth noting: “water escape” is the insurance company lingo for water damage caused by something within the building, like a pipe.
The condo act also specifies that damages caused by major perils does not include a condo owner’s belonging or fixing damages to condo improvements, for example, if you put in new countertops. Condos have what is often referred to as a standard unit by-law. It outlines what is standard in its units (e.g. materials used) ; anything outside of that is considered an improvement and it is not covered by the condo corporation’s insurance.
2. Landlord insurance
If you are renting out your condo you need to get condo landlord insurance, this typically covers the following:
Upgrades you’ve added to the condo like flooring, countertops and finishings. The degree to which these items are repaired and replaced depends on your insurance policy.
Premises liability: in case someone is injured in your condo
Contents: furniture and appliances that you own and your tenant uses
Theft: if your belongings are stolen from your condo or storage locker
Loss of rental income: if you cannot collect rent because your unit is considered unsuitable for living after an incident like a fire or flood and repairs are being done
3. Tenant insurance
Tenant insurance is not legally mandatory in Ontario, but we cannot stress enough how important it is to make this a part of your rental agreement with your tenant and ask for proof of it. Tenant insurance typically covers the following:
Contents: A tenant’s belongings like electronics, clothing and furniture will be protected from incidents like flood damage. This includes if a neighbour’s negligent behaviour causes damage like theft or flooding.
Personal and Premises Liability: If your tenant causes flooding to other units in the building, tenant insurance will cover this. It also provides coverage if their guest injures themselves in your condo and the tenant is sued.
Additional living expenses: If the condo is uninhabitable as a result of the damage and needs to be repaired, tenant’s insurance will cover the cost of them renting out another place or staying at a hotel.
Worth noting: Double check your policy to make sure all the information you provided about the building and unit are correct, for example the age of the condo and the number of floors. There can be a lot of conflicting information about your building online, so it’s always best to double check with your building’s management that you have the facts right and that you pass along the correct details to your tenant, so they can also provide the correct information to their insurance provider. You would never want a policy to be considered void because simple facts are incorrect.
Imagining all these scenarios can be very stressful, so do your homework and you’ll have peace of mind knowing your insurance policy has you covered in case anything goes wrong.
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The blog posts on this website are for the purpose of general introductory information. They can’t serve as an opinion or professional advice. Speak to a professional before making decisions related to your circumstances.