What is condo insurance? Coverage explained
If you’re looking for more amenities, more services or less maintenance, the condo lifestyle might be for you. But no matter whether you live in a condominium or a house, you’ll need insurance to cover the unexpected.
In this article, you’ll find information to help you understand what condo insurance is and what goes into your insurance pricing. We’ll discuss the differences between condo owners’ insurance and condominium corporation insurance. (Condo corporations go by different names in different provinces, such as condominium associations, strata corporations and syndicates.) We’ll also cover the types of protections included in an insurance policy and who pays for what when something goes wrong.
What is condo insurance?
Condo insurance is a type of home insurance that covers your personal possessions inside your individual unit. It also covers any unit improvements. While condominium insurance and home insurance are similar in some ways (they both cover your personal belongings and offer liability coverage), they’re not exactly the same. The biggest difference is that home insurance covers your dwelling, as well as other structures on your property, like sheds, decks and fences. Condo insurance, on the other hand, covers any upgrades or improvements made to your unit over the years, such as new kitchen cabinets. The building, including individual units, is generally covered by something else: condominium corporation insurance.
Did you know that upgrades to your unit could affect how much your insurance premium costs? For example, turning your builder-grade bathroom into a luxury spa will increase your property value, which could also increase the price of your insurance.
Condo owner insurance vs. condominium corporation
insurance: what’s the difference?
As far as insurance is concerned, condos are just a little bit different. Condominium insurance uses a tag team approach, with two different types of insurance working together. Your condo corporation has one type of insurance. You, as the unit owner, have another. It’s important to understand the difference, because while the two policies work together, they cover different things, and you need to make sure you get the right coverage for your unit.
Your condominium corporation’s insurance covers the whole building, including common areas like the lobby, elevators and parking garage. It may also cover some of the cost to repair your unit, depending on your contract with your condo corporation.
Your condo owner’s insurance, on the other hand, could cover things like:
- Your liability if you accidentally cause damage or injury to someone else
- Theft or damage to your personal belongings
- Damages to upgrades you’ve made to your unit
Who pays for what in the event of a loss
It all depends! To figure out who pays what after a fire, theft or water damage, you need to know what the damage is, what caused it and the extent of the loss. For example, if a fire damages the lobby and surrounding condo units, the costs could be shared between the condo corporation’s insurance and your condo owner’s insurance. Remember: if something happens, contact your insurer. They’ll take the time to understand the situation so they can help you.
How much is condo insurance in Canada?
Condo insurance costs can vary based on a lot of different things, including the coverage you choose, where you live, your claims history, how close you are to fire services and your heating system.
If you’re looking to keep costs down, one way could be to bundle your home and auto insurance.1
What does condo insurance cover?
A basic condominium insurance policy will typically cover things like fire, theft and vandalism. It will also generally cover some types of water damage, storms and natural disasters. If you feel you might need additional coverage, you can also purchase optional coverages on top of this. Plus, not only does your policy protect your personal property and upgrades to your unit, but it also includes liability coverage for accidental damage to someone else or their property.
Finding the right coverage for your condo unit
When you’re choosing your coverage amount, make sure it takes into account any upgrades (new bathroom, kitchen counters) and all of your belongings. To figure out the total value, it’s a good idea to make an inventory. It’s the kind of thing that will come in handy if you ever have to make an insurance claim. But do keep in mind that if you have any particularly valuable items, insurance limits may apply. So it’s worth asking about extra coverage for items like jewellery, art or a high-end bicycle.
Is condo insurance mandatory?
It may not always be required by law, but condo corporations and lenders generally require that you have condo insurance. At minimum, you need liability coverage to protect yourself in case of unintentional bodily injury or property damage that you cause to a person who doesn’t live with you. Condominium corporations typically require between $1 million and $2 million in liability coverage. And it’s always a good idea to have insurance to protect you and your things, just in case.
Steps to take in the event of loss, theft or damage
Once you're sure everyone is safe and things are under control, here's what you’ll need to do:
- Contact your insurer to file a claim. They’ll be able to answer your questions and provide the support you need for some peace of mind.
- Work with your insurer and condominium corporation to handle the repairs.
- Make sure you can cover any expenses that aren’t covered, like your deductible.
If you’ve made an inventory and included any improvements to your unit, the claims process will go a lot smoother.
Bill 141 and what it means for condo owners in Quebec
Bill 141 is a law that was passed in Quebec in 2018 under the Civil Code of Québec. It formalizes co-ownership rules and closes regulatory gaps. It requires condo buildings to be appraised every five years by a certified appraiser and to have enough insurance to cover rebuild costs in case of a disaster, to protect co-owners from major damage or repair costs.
Landlord insurance for rental properties
If you plan to rent out your unit, here’s a checklist of some things to do first:
- Check your condo’s rules and your local regulations to be sure you’re allowed to rent it out.
- Find reliable tenants who will be able to pay the rent each month.
- Write a clear rental agreement that spells out the rights and responsibilities of you and your tenant.
Ideally, your tenant should have tenant insurance. As the condo owner, you at least need liability insurance. You also need to let your insurer know that the unit is being rented, whether it’s a short-term or a long-term rental.
Key takeaways
If you own a condo, you’ll definitely want condo owner’s insurance for your unit, to cover any improvements or upgrades, all your belongings, and liability. And if you buy any valuable items, remember to update your condo insurance coverage. If you’re curious and want to know more about other optional coverages that might be a good idea for you, why not get a quote?
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[1] Discount varies depending on your province of residence. May not be available in all jurisdictions.