Years ago arranging insurance for condo owners was very simple. Most brokers advised clients to buy enough insurance to replace all their personal property in case of a total loss. Additionally as a condo owner they needed to insure any upgrades to their unit including marble floors, granite countertops, or hardwood cabinetry. Everything else was covered by the Condo Corporation Master policy. This included items like the basic building structure, common areas, and anything in each unit that was architecturally designed as standard quality. This is no longer the case.
Today a condo owner needs to be a bit more savvy when buying their own individual condo policy. As a way to save money and keep monthly condo fees down many condominium corporations are offloading their insurance burden onto the backs of individual unit owners. It is not uncommon to see a Condo Corporation restrict insurance coverage for each unit holder to basic structural walls, floors, electrical and plumbing services. This makes the condo owner responsible for all the flooring, decorating, fixtures, cabinetry and built-ins. Unfortunately many Condominium owners are not aware of this and consequently find themselves underinsured.
How do you find out what you're responsible to insure?
Every Condominium Corporation is required by the Condominium Act to produce a set of by-laws that outline, amongst other items, what insurance protection they provide and what the unit holder is liable for. The best way to protect yourself is to ask for a copy of the bylaws that address insurance and bring it to your broker. That way a policy can be tailored to provide you with the correct amount of insurance.
Other Features that should be Included in your Condo Package Policy
- Comprehensive Personal Liability: This would pay for bodily injury or property damage that you are personally liable for.
- Common Elements Loss Assessments: In the event you are assessed a fee by your condo board for an insured loss to common elements like a swimming pool, gym, or parking garage.
- Additional Living Expenses: While the building or unit is being repaired or rebuilt this coverage would pay your rent or additional expenses until your unit is habitable.
- Unit Additional Protection: If the condo Corporation has no insurance, inadequate insurance or it's not effective, this coverage would protect you.
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Here are some reasons to help you understand why.