CLEI for Strata / Condominium Corporations
After the introduction of the Commercial Legal Expense product it became evident that there was a requirement for a slightly different product to meet the needs of Condominium and Strata Corporations.
Legal Expense Insurance for Strata / Condominium Corporations
These corporations are unique by virtue of having specific legislation governing their activities. A product was created to provide protection against specified perils not generally covered by other insurance policies.
Many Condominium Corporations only have volunteer staff, directors and officers and no employees. Some use Property Management companies to oversee the operations of the properties/units. Very few have any access to cost effective legal services.
The individuals insured by the policy include directors, officers, council members or similar office holders who are appointed or elected pursuant to the Condominium legislation. Generally it also extends to provide protection to the designated executive of the Property Management company.
Summary of Coverage
There are generally 6 Insuring Clauses: Civil Defence, Criminal Defence, Personal Injury, Property Disputes, Defence of Disputes with Owners and Contract Disputes (see overleaf for details). Other Insuring Clauses, such as Employment Disputes, may also be available to meet specific requirements.
Civil – Privacy issue: The corporation and the managing Director are sued by one of the unit owners for allegedly failing to comply with privacy legislation. Whether they are found liable or not the insurance will respond to the defence including helping to mitigate the fine, sentence etc.
Civil Defence – Appeal against Statutory Notice: The city imposes a statutory notice restricting the use of a portion of the common area for parking purposes. The insurance provides for a legal opinion on the merits of appealing such decision. It there are reasonable prospects of success the policy responds to enable an appeal against the imposition of the notice.
Criminal: The corporation is investigated by health and safety authorities concerning a number of perceived breaches of the regulations in relation to the common areas used by all the unit owners. Legal assistance is provided to assist in refuting the breaches.
Property – nuisance/trespass: A neighbour is interfering with the operations of the corporation by continually parking his vehicle on the property to the detriment of the owners whose parking spots are used. Despite reasonable attempts to try to resolve this issue it becomes necessary to seek legal intervention.
Council and Owner Dispute: The corporation was involved in a dispute regarding flooring installed in a unit by an owner in breach of the by-laws. The corporation served the owner with an order to remedy the situation. The owner challenged the by-law in the courts. Representation was provided to defend the action and legal costs for the corporation were in excess of $12,000.
Contract – dispute with contractor: Landscaping work undertaken by a company later resulted in some landslide and water collection. The company refused to remedy the problem and the corporation received legal representation to enforce the warranty terms.
Employment: The corporation employs an assistant whose performance and attendance has become unsatisfactory due in some part to personal problems. After discussions and several letters trying to resolve the matter the corporation determines it is necessary to terminate the employment. The Insured consults with the Telephone Legal Advisory service and receives advice on the correct procedure to do this. The employee claims wrongful termination and the corporation is provided with legal representation to defend the action.
- Actions against Underwriters, STERLON or the broker
- Judicial Review
- Pre-existing matters
- Legal fees incurred prior to approval
- Employment disputes occurring within the initial 90 days of coverage (first term only)
- Matters relating to assault, violence, fraud, conspiracy to defraud or dishonesty
- Debt recovery
- $100,0000 per claim, to an annual total expense of $250,000 for reasonable legal and professional fees (at a rate of up to $400/hour). Higher Limits available: $250,000/$500,00 or $500,000/$1mill.
- Legal proceedings must commence in Canada
- $500 deductible any one claim (not applicable to TLA)
- No payment for awards, damages, fines or penalties