Condo insurance is different than renter or homeowner insurance. The main reason is the unique relationship between the condo corporation and the individual condo unit owners.
Condo Corp and Unit Owner insurance policies are designed to complement each other so that each interest is protected without duplicating coverage. In general terms, the condo corporation’s policy is designed to insure the structure of the building(s) and all common areas. The individual unit owner’s insurance is designed to insure the interior of the individual unit.
Condo insurance can be complicated. Each condominium can have a unique set of by-laws which set out the relationship between the condo corporation and unit owners as well as between unit owners. Insurance policies need to be flexible enough to satisfy various arrangements.
Here’s a breakdown of condo insurance coverage and considerations for the condo unit owner. The coverages identified with an * are those coverages that are unique to condos and provide flexibility where the condo corporation’s insurance policy and that of the unit owner’s overlap.
Third party liability: Liability insurance protects the condo owner from lawsuits related to the condo. A disconnected hose from a dishwasher may allow water to run freely for an extended period. The condo owner may be held responsible for any resulting damage to other units (depending on the condo by-laws).
Contents or Personal Property: All things moveable in your condo unit – appliances, electronics, furniture, clothing, sports equipment, etc. You will be required to estimate the overall value for your policy limit. Most policies use a Replacement Cost valuation which means, if you had to buy everything new today, what would it cost to replace all of your contents?
*Improvements & Betterments: These are the built-in features to your individual condo unit that have been added or upgraded by you or previous owners. The value of the Improvements & Betterments is based on the cost of the improvement or alterations beyond the basic unit finishing. For instance, if the bathroom was renovated with higher quality components, the improvement value is the difference between the basic bathroom and the upgraded one.
Additional Living Expenses: In the event of an insured loss which leaves your condo unit uninhabitable, Additional Living Expenses provides funds for you to live elsewhere while your unit is being repaired.
*Loss Assessment: Insures the common property and liability should the condo corp’s insurance be inadequate to cover a property or liability loss related to the common ownership.
*Contingent Coverage: Insures your condo unit itself in the event that the condo corp policy fails to protect you or is insufficient.
You don’t need to be a lawyer or commit hours of research into your condo by-laws to properly protect your interests. You only need to engage a qualified insurance broker to help you select the proper condo insurance policy for your needs.
Canada Mortgage and Housing Corporation – Condominium Basics