CONDOMINIUM OWNERS FORUM SYMPOSIUM 2018 INSURANCE Q&A Paul VanderHooft – Insurance Brokers Association of Alberta (IBAA)

INTRODUCTION IBAA – Insurance Brokers Association of Alberta Who are we? What do we do? Paul VanderHooft, B.Comm, CIP, CAIB Who am I? What do I do?

Q&A SESSION What do I need to know about condo insurance? As a condo board member? Bylaws, Bylaws, Bylaws What type of condo complex do we have? Bare Land Condominiums Standard Condominiums As a condo unit owner? What type of condo unit have I purchased? Homeowner vs Condo Unit Owner Insurance Unit Holder Improvements – who insures these? Special Assessments – How does insurance coverage respond?

Q&A SESSION What are the minimum insurance requirements for a condominium community (corporation)? Property Coverage Named Perils Insurance vs Broad (all risk) Perils Insurance Additional Perils Sewer Backup, Flood, Earthquake Equipment Breakdown Additional Coverages & Extensions Crime Coverage Liability Coverage (CGL, Automobile, D&O, Environmental)

Q&A SESSION How much money should be in a reserve fund to satisfy insurance providers? Reserve fund study Reserve fund should be fully funded to meet requirements laid out in the study Insurance providers are becoming increasingly aware of the importance of fully funded reserve funds Maintenance issues Liability of directors & officers

Q&A SESSION Should condominium corporations have contingency funds for items outside of planned replacements? Yes Items that are near deductible thresholds should not be pushed through as insurance claims. Example: Burst water pipe causes $15,000 in damages to condominium common areas. Water damage deductible is $10,000. Have any other claims been made during the policy period? Will underwriters be considering claims frequency in setting rates for the renewal term ahead? Exceptions: Property claims requiring proper cleanup to prevent future issues such as mould Liability claims involving injuries

Q&A SESSION Is it recommended to have your Unit Holder Policy with the same insurance company as the Condominium Corporation? Not necessarily First and foremost, your unit holder policy should be the policy that best covers your own needs. Not all insurance companies provide coverage for both condominium complexes and individual unit holders Insurance companies do not like to have too high a concentration of insured values all in one location. As such, you might not be able to get insurance for your unit with the same company that is insuring the building(s)

Q&A SESSION If flooding occurs in a unit above mine causing damage to my unit and/or my belongings, what is our recourse? Make claim against your own unit holder policy Coverage under your own policy is typically for replacement cost coverage on both contents and unit improvements Coverage under the liability portion of someone else’s policy is usually limited to depreciated actual cash value Let your insurance adjusters work to hold the other parties (condo corp, property management firm, restoration contractor, etc) accountable for timeliness You may lose your claim free discount but it is generally far more productive to let the claims professionals handle the claim for you

Q&A SESSION Please comment on catastrophic condo losses and the probability of them being difficult to settle? Condominium claims are some of the most difficult property claims to settle Catastrophic losses will involve almost all unit holders, numerous insurance companies, the board of directors and a multitude of contractors. Potential for litigation can also add to the amount of time it takes to settle Composition of Board of Directors Well-meaning volunteers vs carefully selected individuals with certain skills Board succession planning vs fingers-crossed approach

Q&A SESSION How will (or is) insurance for condominiums affected by climate change? No one can deny that severe weather is happening with increased frequency Storm activity is increasing – localized flooding, hail storms, high wind events Increased periods of dryness and high temperature is increasing wildfire risks Building methods and materials used are not necessarily resistant to these exposures (i.e. vinyl siding, shingle roofs) Higher claim frequency & higher damage values mean increased insurance premiums

Q&A SESSION What is the impact of cannabis plant growing on insurance policies? Presently, growing cannabis plants is illegal and insurance policies are not responding to cover damages that are the result of illegal activites; October 17, 2018 it will be come legal to possess up to 3 cannabis plants to grow cannabis for personal consumption; Insurance wordings will adapt to clarify what will be covered and what will not be – scenarios falling outside what has been legalized will likely still be excluded from coverage The industry is in early days and it is likely to early to be definitive on how this will play out

Q&A SESSION Paul VanderHooft, B.Comm, CIP, CAIB Thank you! Paul VanderHooft, B.Comm, CIP, CAIB President – IBAA (Insurance Brokers Association of Alberta) Manager – Commercial Lines (Westland Insurance Group) pvanderhooft@westlandinsurance.ca OR 403-328-7777