As a condo owner or perhaps a potential buyer, there are 2 very simple things to understand about insurance. (Of course, there are many more than two things involved in this topic, but only two are critical if you are concerned that the topic is a good cure for your insomnia … these are the two important ones, so serve the coffee and stay with me. in this.)
Number one: The Condominium Corporation is required by provincial legislation to have general liability insurance, Directors and Officers, Errors and Omissions, and machinery and equipment, and the Corporation’s bylaws may stipulate other coverage with respect to the Corporation’s operations. These documents ensure that, as the owner, your interest in the condominium as a whole is protected. (This is also the insurance your mortgage company will want to know about.)
If the fire damages or destroys the building or a block of townhouse units, the Condominium’s insurance policy will cover the costs of repair or replacement and the owners will not be obligated to pay the reconstruction costs.
Your monthly rates include your share of this cost for the property as a whole.
Number two: Condo insurance won’t pay your Uncle Bob’s lost wages when he trips over his study ottoman and breaks his leg. It also won’t replace your puffy white cloud couch when your red wine juggling routine goes awry.
These types of claims – personal liability and personal property damage (only) should be addressed through your own personal insurance policy. Most insurers offer specific coverage for condo owners and it is generally more affordable than standard home insurance as your insurer is not responsible for covering the cost of replacing the structure itself, but only the contents and (according to the statutes of your Corporation) Improvements you make inside the structure. Your broker can help you find the most suitable coverage for your needs. (Hint: If you don’t currently have a broker or want a competitive quote, you can check with your condo broker for a quote – some will offer homeowner discounts on a property they cover.)
What you should keep in mind is that there are two types of insurance and that one is entirely your responsibility.
Remember the poor souls you’ve seen on the news whose condos were damaged or destroyed by fire: Your unit will be repaired or rebuilt, but your personal belongings won’t be replaced if you don’t have your own content policy. A final note in this regard, and this one should keep you from falling asleep, is to make sure your personal policy will pay any deductibles for which you may be responsible. This situation can happen to anyone and it certainly has happened to you in the past – you forget to close your bedroom window before leaving for Christmas, your pipes freeze, explode, and flood your neighbors’ units. Although the Corporation’s insurance will respond to the claim, you may be responsible for the deductible amount. With this coverage on your personal policy, you will not have to pay out of pocket for this mishap (unless the Condominium’s insurance premiums increase next year as a result of the claims history, in which case all of the owner’s fees may increase to cover the additional cost.)
Of course, this is a much more complex topic than can be represented here before we have you looking for a pillow and blanket, so if you are interested in more detailed information, please speak with your broker and / or the broker of your Condominium. about more details.
