What is Condo Insurance?
Does condo insurance cover my unit or the entire building?
When you buy a condo, you become the owner of an individual unit, but you also become a part-owner of the building itself (ie. common areas). As a condo owner, you need two policies: one that provides coverage for the condo unit owner, and one that provides coverage for the condominium corporation (aka Strata) – today, let’s discuss condo insurance.
What does condo insurance cover?
Condo insurance policies include:
Personal Contents: Protection for your belongings, such as: furniture, electronics & computer(s), bicycle(s), jewellery, etc;
Personal Liability: Offers protection from claims made against you relating to property damage or bodily injury. For example if a running tap caused water damage in your downstairs neighbour’s unit or a guest takes legal action after suffering an accidental injury in your condo.
Additional Living Expenses: Compensation for additional expenses that arise if your unit becomes uninhabitable due to loss. If your condo (or building) gets damaged from a flood or fire, you might need to live elsewhere while it’s fixed, which can be expensive. This line item helps with all the additional expenses you may incur when relocating including temporary housing and food.
Water Damage: All policies include basic water damage coverage. This is when there is an escape of water from the pipes hidden behind the walls, or water lines running under the cupboards or sinks, and damages your unit (flooring, furniture, clothing, etc).
Strata Deductible: This is a particularly important one. When your strata needs to make a claim on their ‘master’ policy for the building (for common areas), sometimes the deductibles can be significant (like $250k or even $500k!). This line item of the policy pays your portion owing for the strata’s deductible in the event the corporation needs to make a claim.
What are condo insurance endorsements?
An endorsement is a fancy word for change. When you add an endorsement to a policy, you are changing something in the wordings by either adding or deleting coverage. Common endorsements for condo policies are:
Earthquake: Fairly self-explanatory, but here we go! This would cover your belongings in the event of an earthquake. On a more important note, if there was an earthquake, your strata might have to re-build the entire building! If this was the case, you need to have earthquake on your policy to contribute to the strata’s deductible.
Overland Water: You might be wondering why you would want an overland water endorsement when you are twenty stories in the air. The reason is simple: If there is a flood in the lobby, it will prevent you from getting to your unit and therefore will cause you to claim on your additional living expenses. Without overland water, this would not be a valid claim.
Sewer Back-Up (SBU): It is important to know that a lot of water related losses need to be added to the policy as endorsements – like sewer back-up. When black and grey water backs up in the pipes of the building and comes into your unit, it can cause serious damage (and be very unpleasant). SBU covers this risk.
Scheduled Items: All personal insurance policies have sub-limits of insurance in them, which is a fancy way of saying your coverage is limited for some items. So, lets say you have $50k for your contents, you might only be able to claim up to $2k for a bicycle, or $10k for a piece of jewelry. If you have certain items that mean a lot to you, or hold significant monetary value, you can insure them separately by scheduling them on the policy for an additional premium.
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