The proper insurance is critical for those that own or are looking to own a condominium (sometimes referred to as a strata). However, understanding how condo coverage works is not always a straightforward process.
To protect their investment, condo owners must purchase coverage (also known as condo or unit owner insurance) that works in conjunction with a condo association or corporation’s master policy. Condo owners often wrongly assume they do not need coverage because their condo corporation already has a policy.
Failing to purchase a condo or unit owner policy can leave you exposed to gaps in coverage—gaps that could be incredibly costly in the event of a claim. To better understand the need for coverage, it’s important to learn what master and condo policies commonly cover.
Master Policies and What They Typically Cover
Typically, your condo corporation has a master policy that insures all of the property and common areas that are collectively owned by unit owners. Generally, condo corporation insurance covers the following:
One of the key takeaways is that your condo corporation’s insurance may cover insured losses to the condo building and common property, but it does not cover your personal contents, liability or improvements to your unit. That’s why purchasing additional coverage in the form of condo insurance is so important.
Condo Policies and What They Typically Cover
While having a separate insurance policy for your condo unit is not mandatory, it is highly recommended.
As noted above, a condo corporation’s master policy typically covers common areas. Not only does this limited protection put your personal belongings at risk, but any improvements you make, damage you do to another unit or injuries that occur in your unit will also not be covered.
What’s more, in the event of a major disaster (like a pipe bursting in your unit), you could be held liable for the cost of any repairs. Master policies often include language that identifies the owner of the unit where a specific loss began as the individual responsible for the entire deductible. With this cost sometimes exceeding tens of thousands of dollars, condo insurance is a must in order to protect your finances.
Condo insurance typically provides coverage related to the following:
When it comes to condo insurance, it’s important to remember that a condo corporation will seldom protect your personal property or pay for your living expenses if you are displaced following an incident.
As such, before purchasing your unit, it is imperative that you ask for a copy of the condo corporation’s insurance agreement. That way you are aware of your responsibilities and the amount you need to pay for any deductibles.
In addition, when meeting with your insurance broker, bring a copy of your condo’s bylaws and master policy. This will help in the underwriting process and will ensure that you get the right level of protection.
Depending on the province, condo associations may be required to offer certain levels of protection, and your broker can help you better understand any insurance gaps.
Insurance brokers do not work for an insurance company, they work for you. That’s the key thing that separates them from all other purchase options. It means you have more advice, more choice, better pricing and a representative that’s on your side in the event of a claim.