Condo insurance is widely misunderstood. As a result, we receive calls every day from condo owners in the Toronto area about their insurance coverage and options. Let’s face it; insurance is not always easy to understand. For this reason, we decided it was time to shed some light on condo insurance and the importance of understanding your coverage. Are you ready? Here are the four questions that almost always come up when we’re talking to condo owners in Toronto.
1. Is condo insurance mandatory?
No. Condo insurance is not mandatory in Ontario. However, if you have a mortgage, your financing company will require you to have a condo insurance policy. In most cases, there will be minimum coverage requirements, and these will be outlined in your financing terms. In addition, the lender will want proof of insurance sent from your broker before they will release your funds. However, if you don’t have a mortgage, then technically you don’t need condo insurance. But, if you’d rather not risk everything you own, plus your future earnings, having an insurance policy to help offset any potential losses is a smart choice.
2. Doesn’t my condo corporation’s insurance cover me?
No it doesn’t. This is probably the biggest misconception when it comes to condo insurance. Many condo owners think the maintenance fee they pay each month covers their personal insurance. However, the policy carried by the condominium association only covers damage to the building and common areas, including the lobby, elevators, hallways, pool, gym, etc. This building insurance policy does not provide any coverage for individual condo unit owners. In order to protect yourself and your belongings, you will need to have your own condo insurance policy.
3. What will my condo insurance policy cover?
A condo insurance policy covers a lot more than just the contents of your unit. Here are the five main ways your condo policy will protect you.
Replace your personal property
Every policy has a section that outlines a specific coverage amount for your personal property. This amount covers the cost to repair or replace your personal belongings that are destroyed, damaged, or lost. In addition, the coverage will extend to protect your property in a storage locker, or any items that are temporarily removed from your home. So, if you bring your Macbook on vacation, and it’s stolen from your hotel room, you can still submit a claim under your condo insurance policy.
A word of caution, there are special limits for common valuable items such as jewellery, and bikes. So, make sure you check your contents limits, and talk to your broker if you have any items that are unique or particularly valuable. An experienced broker can provide you with the best options to ensure you are properly covered.
Help after a loss
If you do have a claim like a fire or water damage, that forces you to be out of your unit temporarily, loss of use coverage is a very important. This section of your policy covers any additional living expenses that you incur while you are kept out of your home. Common examples include payment for hotels, restaurant meals, clothing and personal items after a loss. In addition, your insurance will cover any maintenance fees you are entitled to pay during this time as well.
Upgrades & improvements
Many condo owners spend thousands of dollars renovating and updating their space to make it their own. With improvements and betterments coverage, any changes or upgrades you make to your unit are covered. So, you’ll get your granite counter tops and hardwood floors back, instead of the standard builder’s grade stuff that was there when you moved in.
Your personal liability
While your condo association’s policy will likely have liability coverage for any accidents or injuries that occur in the building’s common areas, what happens inside your unit will fall under your own personal liability. So, let’s say you have a party, and one of your guests falls and injures themselves. If that person decides to sue you, then your personal liability will help cover the cost of the lawsuit. Although $1 million liability used to be the norm, it is becoming increasingly more popular for condo owners to carry a $2 million liability limit on their policies. When getting a quote, ask for a quote with $1 million and $2 million liability; you’ll be shocked by the small difference in price.
Common elements loss assessment
What if there is an injury in a common area of the building? The condo association’s policy will cover it right? Well, sort of. The association’s policy will cover payments for any lawsuits or damages, but these policies can have deductibles as high as $50,000. So, to help offset the cost of the deductible, the condo association will split the cost between all of the individual condo owners.
To help protect you from this type of situation, your condo policy offers what is called loss assessment. This coverage will help you pay your portion of the deductible that is applied after a claim on your building’s insurance policy.
The other common situation when loss assessment coverage can help you is when there is damage to the building that exceeds the limits on the association’s master policy. Let’s say there is a huge water loss in the building that results in $1.5 million in damage. However, the master policy on the building only covers $1 million for this type of loss. The remaining $500,000 needed for repairs will then become the responsibility of the unit owners. So, you’ ll be stuck paying your share out of your own pocket if you don’t have loss assessment coverage.
To be safe, we recommend you take a close look at your association’s master insurance policy. This will show their coverage limits, and whether they have any special deductibles for certain situations. If you need help, don’t be shy to ask your broker.
4. How much does condo insurance cost?
Okay, time for the important question; how much will all of this cost me? Well, we’re happy to give you the good news. Condo insurance is usually only a fraction of the price of homeowners insurance. In many cases, you can get the coverage you need for as low as $300 a year! Keep in mind, prices will obviously vary based on the company you choose, where you live, the coverage you want, and your personal insurance history. However, you will most likely be paying a lot less than if you were to insure a home.
While you may not own the building you are living in, you still have a lot at stake as a condo owner. For this reason, condo insurance is just as important as homeowner’s insurance.
In all, having a property insurance policy that addresses your needs is very important. The fact is, all property insurance policies, including condo insurance, cover much more than just the structure you live in.
Remember, there are four main things that every condo owner needs to know about condo insurance.
- No, it’s not mandatory, but yes you need it.
- No, your condo corporation’s policy does not cover you.
- Yes, condo insurance covers more than just contents.
- Yes, you can get a policy for as little as $300 a year.
Need coverage for your condo? One of our professional brokers would be happy to help! Give us a call.