Insurance policies are important for condo owners and co-op shareholders to establish who is responsible when a claim is filed. Not only do residents need to understand the terms of their own homeowner’s insurance policy, they should assess the building’s policy and governing documents to determine their rights and whether there are any gaps in the policy.

Whose insurance policy is responsible for the cost of repairs in condos and co-ops? Typically, the owner or shareholder who is liable for the damage will have their homeowner’s insurance cover the damage. When determining who is responsible, whether it is a resident or the building, it is important to establish the cause of the damage and whether there was negligence. A condo or co-op may limit their liability if the damage is due to the negligence of the owner or shareholder, or their invitees and licensees. On the other hand, if the building was negligent

The building’s governing documents, such as the by-laws or proprietary lease, will stipulate who is responsible for certain maintenance, repairs and replacements. For instance, owners and shareholders will generally be responsible to keep the interior of the apartment (including appliances, walls, floors, and electrical fixtures) in good repair, whereas the building will be liable for common areas, pipes or conduits in the walls, ceilings or floors, and centralized heating and air conditioning. However, just because the building is responsible for a certain repair, does not mean that the unit owner or shareholder will not have to contribute to the deductible on the building’s insurance policy. It is important to review the building’s insurance policy to establish when owners and shareholders would need to contribute.

In the event that one unit owner or shareholder causes damage to a neighboring apartment, whose insurance policy covers the repairs? For instance, if a pipe in a wall bursts during the renovations in one apartment and causes a flood in another, is the building or the unit owner or shareholder liable for the damage? Some condos and co-ops will include a right of subrogation in their insurance policies and in the building’s governing documents. This would allow for the building’s insurance to cover the damages and recover the whole or part of the claim from the unit owner or shareholder who caused the damage. However, condos or co-ops may insert a provision in their governing documents for owners and shareholders to waive their right of subrogation.