Condo Insurance Coverage Explained
With the cost of new homes increasing at a rapid rate, condo's have become an affordable option to break into the housing market. They offer many benefits over traditional home ownership, including lower cost upfront, less expenses and fewer responsibilities. What many consumers are not aware of is that every condo corporation has different rules for what each unit owner is responsible for.
Typically your condo corporation will have a master insurance policy that covers all the common areas such as the hallways, stairs, pool, gym, parking etc. This policy will also cover the exterior of your unit. However every policy differs in the extent of the coverage. When you purchase a condo you should check with your corporation for what you are actually purchasing. Reading the agreement will give you a good idea of what you are responsible for, and what the corporation is responsible for in respect to insurance coverage.
The condominium master policy may cover the unit as it was sold, which means the corporation is covering the interior walls, floor, kitchen cupboards etc. Alternatively it may only cover the exterior walls, which means YOU would be responsible for the interior walls, flooring, cupboards etc. This coverage has to be included under your contents limit. It is very important that you KNOW what you are responsible to insure, so there is not a shortfall on your policy in the event of a claim.
An important distinction between homeowner coverage and condominium coverage is that you must choose the limit of insurance for your condo, including all of your contents. The limit you choose should take into account how much of your condo you are responsible for.
Some additional coverage that many condo policies cover are:
Condominium Unit Owners Coverage – Which protects you for damage to your unit (not including your betterments and improvement) in case the policy for the corporation is inadequate or is not in effect.
Improvements and Betterments - this covers any upgrades made to the unit above how the original unit was sold. (it doesn’t matter if you did the improvements or a prior owner eg., upgrade kitchen cupboards)
Unit Additional Protection - covers if the condominium master policy has a short fall, it will pay to rebuild your unit.
Property Loss Assessments - covers if the condominium master policy has a short fall and you are assessed to pay for the common areas.
Liability Loss Assessment - this covers if the condominium master policy has a short fall from a liability suit, and you are assessed to make up the difference.
It is important that you check with the condo board to make sure the by-laws haven’t changed and you are now responsible for any portion of the building. We have had a few cases where the unit owners are now responsible for flooring, cabinets even paint on the walls. If this is the case, you should increase your coverage.
If you are thinking of purchasing a condo or already own one, please contact our office 905-623-4406 to ensure you are properly covered.