Condo insurance policies
Sometimes we think we’re covered, until we find out we are not.
There are two types of condo insurance, condo association and personal homeowners. As an owner, or potential owner, are you aware of the difference? It’s up to you to make sure you have the right coverage for your investments.
Different condo insurance policies
Condo association insurance covers the common property. Common property includes entrances, elevators, roofs, parkades, heating, plumbing etc. A portion of your monthly condo fees will go towards the cost of this policy. Details of the associations’ insurance can be found in the insurance certificates, available from the condo association.
In contrast, personal homeowner insurance covers you and your belongings. This insurance is purchased in the same manner as car insurance. Quite often, insurance providers discount premiums when multiple policies are combined.
Condo insurance components to consider
If you purchase a condo under construction, or a brand new unit, you are covered under the New Home Warranty insurance plan. Full coverage is available for one year against certain defects in workmanship and materials.
Outside of New Home Warranty and condo association insurance, it’s important to have homeowner insurance that covers you and what is yours;
- personal property
- liability
- loss assessment
This is what insurance companies call a comprehensive coverage plan.
Let’s take a closer look
Personal Property – pretty straight forward, is everything within your condo walls that is not attached. Determine a replacement cost of all your personal items, this is what the value of your insurance would be. Some people like to have coverage on high value items such as expensive jewelry and collectibles. To ensure these items are covered additional insurance may be required.
Depending on the loss and how it occurred, damage (cabinets, light fixtures, counter tops and flooring) could be covered under the condo association insurance. Insurance would replace everything back to the standard as identified in the condo documents. As a result, it is in your best interest to keep your insurance company in the loop of any improvements you make,
Liability – someone slipping and hurt themselves within your condo unit is an example of homeowner liability coverage. If this were to happen outside of your unit, within a common area, the condo association insurance would address any claim.
This also covers you in the event of an accidental fire or flooding. If you’re filling up the sink to wash dishes, get a phone call, and totally forget about the sink, and flood the units below you. The condo board may come to you to cover damages to the units below.
Loss assessment – this coverage would kick into place if ever the condo associations reserve fund is depleted and a special assessment is charged, to cover an insurable loss. These special assessments can be quite hefty. We have seen clients looking to refinance their property to cover such costs.
In Summary
When purchasing a condo bare in mind that you may not be fully covered by condo association insurance. Cover the gaps with personal homeowner insurance.
Have your lawyer or insurance agent review the insurance certificates. They can then advise you as to what type of homeowner’s insurance is best for your situation.
Down the road if you make improvements to your property, remember to contact your insurance provider. You’ll want to ensure your hard work and efforts are covered in the event of an incident.
Above all, doing your homework upfront could save you in the long run.
