If you own a condo, you might wonder what type of insurance you need to adequately protect your asset and your belongings. Condo insurance varies from home insurance, and we will dive into the key differences, and what coverage you need for a condo below.
Is Condo Insurance Necessary?
Condo insurance protects your personal property and provides liability coverage. While the condo association’s policy typically covers the building structure and common areas, it does not extend to your unit’s interior or your belongings. Think of your condo association’s policy as covering things on the outside unit, but the coverage does not extend to things inside of your unit. It is important to note that the condo association policy will always have a deductible (anywhere from $10,000 to $125,000), which is divided between unit owners as a loss assessment. Without your own condo insurance policy, you would be responsible to pay for the deductible out of your own pocket.
Understanding Condo Insurance
Condo insurance differs from home insurance as it focuses on protecting the unit owner’s personal property, unit improvement or renovations, and liabilities within the condo structure. Home insurance typically covers both the structure and personal belongings.
The condo association’s insurance usually covers the building’s structure, common areas, and liability for the association. In the case that the condo association’s policy needs to be used, for example for a flood, the condo association will activate their insurance and require a loss assessment be paid by unit owners. The loss assessment covers the deductible on the condo association’s insurance policy, and that cost will be split between all the units within that building. That’s when your condo insurance would come into play. Your own insurance policy would help cover some of the cost that the building is passing onto its residents.
Key Coverage Details
- Personal belongings: Protection for your possessions such as furniture, electronics, and clothing.
- Personal liability: Coverage for legal expenses if someone is injured in your unit.
- Renovations and upgrades: Insurance for any renovations or upgrades you’ve made to your unit.
- Loss assessments: Coverage for your share of assessments levied by the condo association for covered losses to common areas.
- Additional living expenses: Reimbursement for temporary living expenses if your unit becomes uninhabitable due to a covered event.
Condo Insurance Benefits
Condo insurance provides peace of mind by protecting your assets and finances from unexpected events like theft, fire, or natural disasters. It ensures that you’re not left with a financial burden in case of a loss.
For example, a fire breaks out in the shared laundry room and causes extensive damage to appliances, walls, and surrounding areas. Condo insurance would help cover the cost of the loss assessment amount that the strata’s policy would pass along to you as the unit owner, as well as replace any personal belongings that were damaged or damaged to the inside of your unit.
Affordability Compared to Homeowners’ Insurance
Condo insurance is typically more affordable than homeowners’ insurance since it covers less physical property. However, a few things can impact the cost of your insurance policy:
Your strata’s insurance policy
The level of coverage provided by your strata’s policy may affect what you need to cover with your own insurance. For example, if the strata’s policy has high deductibles or limited coverage (like water damage or earthquakes), you may need to supplement that with coverage in your own condo insurance policy, which would increase your costs.
Amount of valuables claimed
If you have expensive items like jewelry, electronics, or artwork, you may need additional coverage to protect their full value, which could also increase your cost.
Coverage Limits
Condo insurance policies have coverage limits, which are the maximum amounts the insurance company will pay for covered losses. The higher the coverage limits, the more protection you have, the higher your premiums will likely be.
Deductibles
The amount you agree to pay out of pocket before your insurance coverage kicks in to pay for a covered loss. Choosing a higher deductible can lower your premiums because you’d be taking on more financial risk in the event of a claim.
Mandatory Considerations and Requirements
Understanding the specific requirements of your condo association and any legal mandates regarding insurance coverage is crucial to ensure compliance and adequate protection. If you would like support on understanding your strata’s insurance policy, and review what kind of policy you need, one of our friendly brokers would be happy to help!
Differences from Home Insurance
While both condo and home insurance provide property and liability coverage, condo insurance is tailored to the unique needs of condominium owners, focusing on personal property, unit improvements, loss assessments, and liabilities within the unit.
Condo insurance places more emphasis on personal property and liability coverage within the unit, whereas home insurance typically covers both the structure and personal belongings on the property.
Understanding Condo Corporation Policies and Gaps
Condo owners should be aware of any gaps in coverage between the condo association’s policy and their personal condo insurance to avoid being underinsured.
Discussing additional coverage options and enhancements allows condo owners to tailor their insurance policies to their specific needs and preferences.
Condo insurance is essential for protecting your personal belongings, liabilities, and financial well-being as a condo owner. Understanding the coverage, benefits, and costs associated with condo insurance is crucial for making informed decisions.
If you have questions or would like a quote for Condo Insurance, contact us today, and one of our Insurance Brokers will be happy to support you.
