Condo Insurance 101

A lot of condo owners do not realize that they need their own separate home insurance beyond what their condominium association covers. A building insurance policy (most commonly called the master policy) typically only covers the common areas, such as the lobby, elevators, and gym, but does not cover an owner’s personal belongings. It also doesn’t cover any improvements you make, if you damage another unit, or if someone gets hurt while visiting your unit.

While having a separate insurance policy for your condo unit is not always considered mandatory, it is highly recommended. On top of the usual reasons you need home insurance (protect your investment), as a condo owner you could be on the hook for major repairs. That’s because the master policy for the condominium will often have rules in them that stipulate that if the loss began in your unit (example, if a pipe bursts in your apartment and spreads to other units) you could be responsible for the entire master policy deductible (which could be in the tens of thousands of dollars). Your own insurance policy can help cover this expense. Figuring out what kind of condo insurance you need can be complicated. But with TD Insurance, we can help you tailor your insurance package so it meets your individual needs.

First you need to understand a few basic terms:

  •   All-Risk insures your building and contents for losses due to the widest range of perils (or risks), unless specifically excluded from your policy like intentional damage
  •   Personal Liability insurance protects you for unintentionally injuring someone or damaging their property and have to pay damages (example: someone has a slip and fall on your walkway, breaks his/her leg and now cannot work for a period of time)
  •   Contents Insurance covers your belongings (including when you travel) for losses resulting from the most common types of perils (or risks) up to a specified amount
  •   Replacement Cost Coverage means that the contents of your home are insured for the amount it costs to replace them without depreciation
  •   Additional Living Expenses Coverage will help you pay for reasonable and necessary expenses (like hotel and food costs) in the situation you are forced to leave your home following an insured peril (or risk) for a period of time
  •   Improvements and Betterments Protection compensates you for any upgrades you’ve put into your condominium, on top of what the building originally provided for you, up to the limit of the replacement value. For example, if your unit was originally finished with a medium-grade carpet valued at $5,000, and then you upgrade it to a high quality carpet valued at $10,000. The Improvements and Betterments protection will ensure you receive the full value of your new carpet in the event of a loss.
  •   Loss Assessment is when you share responsibility with others for common property. With Loss Assessment, your insurer will pay, up to a stipulated limit, your portion of any loss for common property you are responsible for.

Then understand what the condo corporation's master policy says.

If you own a condo, typically you only own the individual unit outright, and then have a shared ownership of the rest of the condominium building. From an insurance point of view, that means that you have a shared responsibility for insuring the common areas of the condominium. Normally, the cost of this building insurance is a portion of your condo fees.

The condo association’s master policy, as well as the association rules, should clearly spell out which parts of the complex are insured through your association dues, and which parts are not.

Learn about the importance of Loss Assessment Coverage.

Loss Assessment coverage is an important feature of condominium insurance because you equally share in the responsibility with the other condo owners for the condominium building. That means that if there is a special assessment for your condominium building, all the condo owners have to split the cost of the assessment.

Ask how your storage locker factors into your policy

If you have any belongings stored in your condominium locker for safekeeping, make sure to tell your insurance provider. If your locker is owned as a separate unit, you must disclose this to your insurer to ensure that the locker and all the content inside are properly protected.

Find the home insurance coverage that best fits your needs.

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