We are purchasing a new condo and have been informed that our interim occupancy date is coming up next month. Our lawyer has informed us that one of the conditions of taking interim occupancy is that we must carry $2 million liability insurance for our unit. Presently, we live in an apartment and only have contents insurance because the building is separately insured for fire and liability. Why do we have to bear the cost of this insurance and how can the developer make this mandatory?

While you are in possession of your condo during interim occupancy, you do not own the property. In fact, the developer still owns the whole building and while they have insurance if the building were to burn down, or if someone slips and falls while in a common element, they have no control over what happens in the individual unit. So, say a guest of yours slips in your shower and injures themselves. The harmed individual would have a potential cause of action against the owner of the unit: the developer. This is why the builder insists on proof of liability insurance for the premises.

Once you own the condo, it is your choice if you wish to continue with this insurance but from a risk perspective, you would be leaving yourself wide open for a nice big lawsuit with no protection.