If you ask someone how they feel about insurance, the word you’d likely hear most often is ‘confused’, especially when it comes to condo insurance. This is understandable given it’s a shared space. For example, what if your upstairs neighbour’s tub overflows and starts coming through your ceiling? What if you slip and fall in the building’s lobby and get injured? What if there is a sewer backup and the items in your basement storage locker are destroyed? Who will cover the expenses involved in all these scenarios? It’s important to understand the difference between personal insurance and what your condo association covers so that you, your space, and your wallet are protected.
Here are 5 common questions we hear on condominium insurance:
1. Do I even need condo insurance?
Yes! Next question.
2. Why do I need my own condo insurance if my Condominium Association has a policy I pay into?
This is a common cause of confusion for condo owners both new and old. Yes, your Condominium Association has an insurance policy; however, it won’t fully protect you and all your belongings. It will likely only cover the following:
- Property damage –in the event there is a fire in or around the building or the roof leaks, for example, this will pay for damage caused to the structure of the building or common areas such as elevators, the lobby, or amenities.
In the event your unit is damaged in a building-related incident, your condo association’s insurance policy will only cover the costs to repair your unit back to what they consider to be a ‘standard unit.’ This means if you’ve done any upgrades to your floors, cabinetry, etc., the additional costs to return your home to its pre-incident condition will fall to you. The association’s policy also won’t cover any of your personal belongings, including your furniture and clothing.
- Liability –in the event someone is injured in one of the common areas of the building, the association’s insurance will cover costs associated with the damages.
The best thing to do is talk with your condo board to find out what is and isn’t covered within their policy. See this article for further reading.
3. If I get my own condo insurance policy, will my stuff be covered in a standard policy or is that an add on?
Yes, your belongings are covered under your basic condo policy. You will however be asked to select a coverage limit to adequately cover the cost of all your possessions. Remember, this includes your clothes, shoes, kitchen appliances, electronics, books, furniture, and the list goes on! That said, “above standard” items, such as expensive jewellery, high-end electronics or sports equipment, and antiques may require extended coverage to cover their full value. While thinking about what coverage limit is best for you, you can get a head start on creating a content inventory, which could also be a big help in getting your life back to normal in the event your property gets stolen or damaged.
4. What is liability insurance and why does it matter?
Liability insurance is also included in your standard personal condo policy and covers you for claims from injuries or damage, to people or property that you may be deemed responsible for. Think of it as ‘trip and fall’ insurance. For example, you’re having a dinner party and one of your guests trips over your child’s toy or slips in the kitchen because you spilled a bit of cooking oil on the floor and breaks their leg! Your liability insurance is there in the event legal action is taken against you. Or, perhaps your washing machine hose leaks while you’re at work and the escaped water damages the unit below you. Your liability insurance can cover the damages to their property, so that you don’t have to pay out of pocket.
5. Do I need coverage for flooding if I’m not in a basement unit or on the ground floor?
Water damage is the most common property claim we see. It can also be extremely costly to repair. While a standard condo policy covers certain types of water damage, such as a washing machine leak or burst pipe, it will not cover sewer back up or overland flooding. If your condo is on a higher floor of the building, overland water is likely not a big threat to your living space, but sewer backups, where sewage is pushed up through the pipes, have been known to reach higher floors. If you have a storage locker in the basement or parking garage, its contents could also be in jeopardy.
We know the ins-and-outs of condo insurance can be a lot to digest, but it’s important to talk to your condo board and your insurance provider to make sure you are asking the right questions in order to best protect yourself, and the things that matter most.