What is Condominium Insurance?

When you purchase a condominium, you own your "unit" and own a share in the common areas of the condominium -- the roof, basement, elevator, heating room, lobby, swimming pool, parking garage, or garden. As a condominium owner, you may be held responsible for harm you might cause to any part of your building, or to others who live or visit the condominium complex. A condominium insurance policy can remove some of the financial worries of condominium ownership.

The insurance policy provides coverage for your personal property, structural improvements to your unit and additional living expenses if you are the victim of fire, theft or other disaster listed in your policy. You will get liability protection to protect you for harm you might cause to any part of the building you live in or to others who live in or visit the condominium complex.

An important feature of your own insurance policy is loss assessment. As a condominium owner, you share responsibility with others in your building for common property. Loss assessment protects you from damage to these common areas.

Sometimes the condominium corporation is responsible for insuring the individual condominium as it was originally built, including standard fixtures. In this case, you'd only be responsible for insuring your personal property and any alterations you or a previous owner have made to the original structure of the condominium like remodelling the kitchen or bathtub. In other cases, the condominium corporation is responsible for insuring only the bare walls, floor and ceiling. You'd be responsible for insuring your personal property, plus things like the kitchen cabinets, built-in appliances, plumbing, wiring and bathroom fixtures. Take the time to find out what's included in the condominium corporation's policy. You can then decide what to include in your personal insurance policy.

Why do I need it:

Your condominium corporation has insurance, so you may wonder why you need your own coverage. Here are some excellent reasons:

• Your condominium corporation's policy only covers items that are part of the building. You need your own insurance to protect the upgrades you have made inside your unit, such as better carpets and built-in cupboards.

• You also need insurance for your furniture, artwork and other personal belongings. Finally, and perhaps most important of all, you need to protect yourself against personal liability for injuries to visitors to your home or for damage you accidentally cause to your neighbours' property.

Condominium Insurance Myths

Myth#1:  “I don’t need my own insurance policy, the Condominium Corporation’s policy covers everything.”

Fact:  The Condominium Corporation’s policy DOES NOT provide coverage for:

• Any improvements or betterments beyond what are defined as “a standard unit” in the master contract and in accordance to the Condominium Act

• Any damage to your personal contents such as furniture, clothing or jewellery, even if the cause of damage occurred outside your unit

• Any liability that you might incur personally

In addition, except in unusual circumstances, the deductible on insurance coverage arranged by the Condominium Corporation is a common expense, to be shared by all unit owners.  If you do not have your own insurance policy to protect you, you will have to pay these costs out of pocket.

Myth #2:  “My unit improvements were already here when I bought this condominium, so they are covered by the Condominium Corporation’s insurance policy, not mine.”

Fact:  Under the Condominium Act, the Condominium Corporation must define a “standard unit.”  In the event of damage to your unit, the corporation is required only to repair or replace items equivalent to the standard unit.  They are not required to replace any improvements made to the unit.  Your personal condominium insurance policy would cover repairing or replacing improvements that you or a previous owner made to the unit.

Myth#3  “I don’t need liability insurance, that is covered under the Condominium Corporation’s insurance policy.”

Fact:  The liability coverage of the Condominium Corporation only applies to exposures that are the responsibility of the Condominium Corporation, such as common areas.  For any exposure inside your unit, the potential liability rests with you, the condominium owner, not the condominium corporation.  As well, any damages accidentally caused by you or a member of your family to the condominium building or to the property of another unit owner are your responsibility as well.

Myth#4:  “The bare minimum of coverage is more than enough for me, I hardly own anything!”

Fact:  Too many people are underinsured.  In the unfortunate event of a total loss (such as fire), you might be surprised at how much it costs to replace your possessions.

Canada Mortgage and Housing Corporation

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