Condo insurance is meant to protect the condo owner from damage or loss to their unit and belongings.
Each policy differs, but perils typically include threats such as fire and theft.
Policies also include liability coverage if someone injures themselves on your property.
They may also include coverage if a loss or damage in your condo causes damage to other units or items within the building.
Even though condo insurance has some similarities to home insurance, it also differs in one important way: it needs to work with the condo association’s master policy to protect you well.
The master policy applies to what lies outside your unit such as common areas, elevators, and mechanicals.
Condo Insurance Coverage Can Vary
An effective condo policy fills the gaps a condo association’s master policy creates.
Insurers generally offer two master policy types and it is important you understand which one your association bought.
The most common master policy is a ’bare walls-in’.
It covers the structure of the building but excludes your personal belongings.
However, some fixtures or installations such as hardwood floors or granite countertops may also be excluded.
Some may even exclude windows, doors, fireplaces, and wiring and plumbing within your walls depending on the policy’s definitions.
Another master policy option is ’all-in’.
Condo associations are less likely to choose this policy type because it is more costly.
Coverage extends to all your unit’s fixtures and installations and anything within the building’s structure.
However, it still does not cover your personal belongings.
Once you understand which policy type applies to your building, you will need to make additional decisions.
Here are the most common coverages you should consider.
1. Property Coverage
The amount you choose for property coverage should be directly related to what isn’t covered under the master policy and the value of what’s within your unit.
This amount can affect how much you can claim if you experience a loss.
To obtain an accurate value for your unit, you can contact a professional such as an appraiser.
Your most recent tax assessment may also offer a ballpark amount for your unit.
You can refer to a recent survey that offers the average price per square foot for a condo in your area.
Finally, you can compare your home to similar units for a general benchmark and then add the amount of any upgrades you’ve made to your home such as crown moulding, granite countertops, stainless steel appliances, or new floors.
2. Loss Assessment Coverage
This coverage protects you from the costs associated with repairs to building property such as heating and ventilation, roofing, and exteriors.
Losses can occur when the master policy does not provide sufficient limits to cover the cost of repairs or upgrades.
When this happens, the condo association divides the cost between homeowners.
Loss assessment coverage can pay these expenses, provided you have an ample limit.
3. Unit Contingent Coverage
If your condominium corporation does not have insurance, has insufficient coverage, or their insurance does not cover a peril, this coverage can protect you against loss or damage, provided your policy covers the peril.
It normally provides up to 250% of the value of your content’s coverage.
4. Personal Liability Coverage
This coverage can pay legal expenses and medical bills if you’re at fault for an accident that injures someone on your property.
5. Personal Property Coverage
This coverage helps to repair or replace your belongings if they are damaged or lost due to a covered peril.
You can choose between actual cash value coverage or replacement value coverage.
Actual cash value pays the depreciated value of your items.
Replacement value pays to restore items to their original condition or replaces them with new items of like kind and quality.
Replacement value coverage costs more.
Personal property coverage includes an overall limit as well as specific limits on high-ticket items.
A thorough home inventory is highly recommended.
Items stored in a locker within your building may be covered.
However, those stored elsewhere may need additional coverage.
Most condo insurance policies do not automatically cover water damage such as a sewer backup or overflow caused by the weather.
However, water damage coverage is often available as an endorsement on a condo insurance policy for a modest fee.
You may want to consider Additional Living Expense coverage if damage or loss makes it impossible to live in your unit.
This coverage can pay for meals and accommodation while your condo is restored.
You may also need an endorsement for costly personal property such as jewelry, antiques, collectibles, art, furs, and computer or photography equipment.
Limits on these items are usually quite low.
Scheduling personal property increases limits and can provide protection from additional risks too.
Increasing Condo Insurance Premiums
According to a 2021 report by LowestRates.ca, condo insurance increased dramatically in B.C. (27%), Alberta (16%), and Ontario (9%) over the past year.
The reasons for this increase are threefold.
Firstly, an increase in catastrophic weather events has driven up insurer costs.
The average payout has risen to $1.
9 billion annually, four times higher than between 1983 and 2008.
Secondly, condos are a collection of homes within one structure.
This increases the risk that damage in one unit can affect others which can increase the cost of each claim.
Finally, many of Canada’s condos are aging which further increases the chances of expensive claims.
- Is the condominium association’s master policy “bare walls-in” or “all-in”?
- What items are included/excluded within the policy?
- Are your improvements or betterments covered?
- Are the master policy limits reasonable or woefully deficient?
- Does your condo association have a contingency fund for large improvements/repairs?
- What is the value of your property for insurance purposes?
- What is the value of your personal belongings?
- Do you own high-ticket items that need to be scheduled?
- Are any of your personal belongings stored off-property?
- Is your area prone to flooding?
- Will you rent out your condo?
- Will your condo policy cover damage to other units?
Frequently Asked Questions
- Is condo insurance necessary?
The monthly condo fee you pay to your association does not protect you. It covers the condominium association’s expenses, including the premiums on their master policy.
Even though condo insurance isn’t mandatory in Canada if you own your condo outright you certainly should consider it. Otherwise, you risk everything you own. Plus, a liability lawsuit could risk your future earnings.
If you have a mortgage, your lender requires condo insurance. However, they are only interested in covering the debt, not your potential losses. It is in your best interests to ensure you have ample coverage. Some condominium corporations also demand insurance in their bylaws.
- What kind of insurance do I need for a condo?
Every owner should have a condo insurance policy or landlord insurance policy to protect their asset and its contents. This should include coverage for any improvements they’ve made to their unit.
Insurance should also include sufficient liability coverage to protect you from the costs involved should an individual injure themselves or die on your property.
Coverage varies depending on your unique situation. If you do not understand the master policy or the coverages you might need, seek free advice from a licensed insurance professional.