SO you have bought the tickets, have the suntan lotion, packed the bags, put the pets up with relatives, stopped the newspaper delivery, got vacation health insurance coverage and now you are heading to a vacation destination for a well deserved trip. You’re ready right? Great! Have a good time.

The stark and unfortunate reality is that countless true-life horror stories are emerging for condominium owners that are very disturbing. Vacationing condominiums owners are getting calls from property managers advising of serious issues while they are away. Vacationers are coming back only to find out about how serious the problems are and that it can be a very costly affair.

“But my insurance will cover everything right?”

An unfortunate trend is turning heads with condominium lawyers, property managers, and in insurance circles. With the growth of investment condominiums in the Greater Toronto Area over the past two decades, condominium owners are getting calls from property managers about tenants who have left for extended absences and reporting problems. More often than not, condominium owners find that tenants have not had anyone check in on the condominium during their absences.

Not commonly known is a clause in most condominium insurance policies that stipulates that during extended absences where your home will be vacant, residents must have someone check in on the property to make sure the property is okay.

This clause is in almost all policies, yet generally it remains unknown.

Each policy is different with respect to how often suite checks must occur and who can be designated as a ‘competent person’ to make such visits.

Insurance experts know full well that this is an area where insurance policies have unique stipulations based on the type of loss that occurs and the type of property that is insured.

Water damage is the biggest exposure to loss in scenarios where a home is left unoccupied for an extended time period. The insurer will likely refuse to pay if the homeowner did not take the proper precautions.

Water damage caused by faulty appliance piping and hoses, incorrect installation of washing / dishwasher machines, poor contracting and illegal renovations are just some of the causes of major water leaks.

In many cases, water can negatively impact multiple units below the source of the water. Thousands of dollars in water damage can occur in each affected condominium unit.

So, What Are Proper Precautions?

Insurance experts describe that most policies include a clause that states if the home is unoccupied for a period of time with no one checking in on the home, the policy may automatically lapse in coverage, meaning that your insurance can be voided leaving you on the hook for all of the damage personally, not just to your unit, but other affected units as well.

This is why when leaving a home unoccupied for an extended amount of time, owners should contact their insurance provider prior to travel to see if such absences are covered under their policy and what to do to make sure they are covered before they leave. There is often no duty imposed on residents to notify insurance companies of travel plans, but there is a clear and distinct duty to ensure that homes are regularly checked. Often tenants never advise owners about such absences aggravating the issue when it comes time to pay for damages. The costs can overwhelm an owner’s ability to pay.

Some condominium property management firms sway boards against involving themselves in conducting vacation absence in suite checks. In the opinion of Riskboss this is a mistake. Having a program designed to assist residents by having the building superintendent and security check in on the suite to check for water leaks and also, run water through drains to avoid carbon monoxide entering the suites through dry drains is prudent. In our opinion this is a very necessary response to such a high community risk. Security can then contemporaneously document the suite check satisfying insurance requirements. Indemnity waivers can be signed by the owner so that there is no liability to the corporation.

How can you get help?
Do you have enough insurance?
Do you have the right insurance?
What should you do to manage your risk?
Is there a problem for you and your condominium?
What does your insurance policy say about this issue?

What Are the Risks of Leaving Your Property Unattended?

One of the country’s foremost experts in condominium law, Gerald Miller was canvassed about this issue. Mr. Miller is the managing partner of Gardiner, Miller, Arnold LLP (www.gmalaw.ca), which is one of the prominent condominium law firms in Ontario. His firm deals with these issues far too often.

“Condominium insurance is very complex. Each condominium corporation has its own insurance, each unit owner should have an owner’s policy and each owner who rents out their unit should also insist that their tenant has a tenant’s policy.

If a loss occurs, all that matters is that there is insurance coverage. We have found that the biggest losses come from water damage due to washing machine and dishwasher hose failure.

It is important for everyone to know what an owner’s insurance policy says about closing that door to your condominium and heading to Florida for the winter or an extended vacation.

A typical Condominium Owner’s policy provides the following:

Loss or Damage Not Insured
We do not insure loss or damage …. occurring after your unit has, to your knowledge, been vacant, for more than 30 consecutive days.

Therefore, it is critical for every owner of a condominium unit to review their policy to determine the time frame their property can be vacant before their insurance policy excludes coverage. If your vacation plans exceed the time frame in your policy, you should contact your insurance company to determine what steps you can take to avoid exclusion or if you can purchase additional coverage. It could be as simple as having a friend, family member or service monitor your unit.”

So How Much Insurance Is Enough?

Insurance for condominiums in Ontario is multi-layered:

• The condominium corporation itself is insured for:
• The building and grounds;
• Common areas and amenities; and
• Standard Unit (or the original state that the developer provided to the original owner).
• The property owner gets their own insurance for their unit, locker, parking space and for something called, Betterments and Improvements; and
• Tenants also get their own insurance.

The best way to ensure that you have enough insurance and the right insurance is to work with a qualified insurance broker or provider.

Tenanted Properties

The first step in preventing unnecessary problems with tenants starts before the tenant even takes possession of your condominium. Here are some ideas that may assist:

• Do proper checks on potential tenants:
  • Letter of employment
  • Credit Bureau worthiness
  • Call references
  • Photo identification
• Have a proper lease:
  • This forms the basis for the tenancy
  • Include clauses:
    • Regarding ensuring the tenant maintains the right insurance
      • Get copies of the insurance prior to occupation and at renewal
    • That instructs tenants when on vacation to have the property checked
    • That no renovations can be made without permission
    • That they cannot do anything that may void insurance
    • That regular mechanical inspections will occur
• Inspect the property for mechanical and plumbing issues twice a year:
  • Document and benchmark these inspections by e-mail to the tenant after each visit

Action Plan

As Riskboss advises, most problems are both predictable and preventable. It is important that property owners understand their risk and have a plan in place to mitigate that risk.

Out sister company, SamsonshieldTM (www.samsonshield.com) has an industry unique In Suite Absence Check service offering that can assist in mitigating this risk and other risks for clients. It consists of the following:

• Engaging with property management to commence the process
• Determining the frequency of the in suite checks pursuant to insurance policy requirements
• In suite checks will be scheduled and conducted jointly by both Samsonshield concierge and the building superintendent
• Suite entry notices will be left inside your unit to prove access reason, dates, and times
• Real time documenting and benchmarking of suite entries to property owners and property management through routine reporting practices
• Real time notifications of any and all issues
• Immediate mitigation of serious or emergency issues (e.g. water leaks)

This plan will alleviate any concerns or residents during extended absences. It also provides expert analysis of issues that may negatively affect your property. Lastly, should it become necessary to demonstrate proof to an insurer that in suite checks were completed by competent persons, contemporaneous reports by security can be retrieved and provided for this purpose.

If you security provider does not offer this service, please contact us for details.