Condo Insurance 101

Feb 17, 2023

Condos are an increasingly popular alternative to buying a full home. Whether you’re downsizing or just looking for a more convenient option, condos offer the excitement of an urban lifestyle at an affordable price. Most condos require a monthly condo fee that goes towards maintenance and overall upkeep of the building. However, for more serious situations, like unforeseen property damage, most condominium corporations have commercial insurance which covers the structure of the building and common areas.

So what do you do if someone breaks into your unit or damages your individual property? Commercial condo insurance and condo fees protect your landlord and the building, but it’s up to you to protect your own unit. This is where personal condo insurance comes in: to cover the contents inside your condo, upgrades or renovations, premise and personal liability, and theft from your unit. Personal condo insurance can be a lifesaver in many situations, so here are some things you should know about your coverage options.

What’s Covered by Commercial Condo Insurance?

Many condo owners opt out of buying personal condo insurance under the expectation that they are covered by the commercial policy. However, most commercial policies don’t work that way. Typically, commercial condo insurance will only insure the common elements of the building structure, which typically includes electrical wiring, HVAC, and rough plumbing.

Personal condo insurance policies are more focused on the needs of the individual condo owner. These policies protect your financial interests, such as condo improvements and betterments and personal property. In the event of a burglary or natural disaster, such as fire or flooding, personal condo insurance insures your personal belongings, providing compensation to replace your property.

That’s why you should consider different options for your personal condo insurance, such as Improvements and Betterments Coverage or coverage for Special Assessments or Loss Assessments.

Improvements and Betterments Coverage

In a condo building, the responsibilities of the condo corporation and the unit owner are dictated by the condo corporation’s standard unit definition. In a modern condo, this definition will typically include only the common elements of the building structure (see above).

Improvement and betterments coverage is used to insure anything beyond the standard unit definition, which may include renovations or upgrades to units. It is not unusual for condo owners to have units valued at hundreds of thousands of dollars, simply due to features such as hardwood flooring, granite countertops, or fancy light fixtures, which may have been included in the original build.

In fact, for high-end condo units, improvements and betterments coverage can often exceed personal property coverage by double or triple. Even if you haven’t invested in renovating your condo, you will want to consider adding this coverage option to your personal condo insurance policy.

Special Assessment & Loss Assessment Coverage

While personal insurance policies cover your belongings and commercial insurance policies protect the building, you may still find yourself with a lapse in coverage in certain situations. In these circumstances, it is crucial that your policy covers the cause of the loss — so you want to consider all possible eventualities when purchasing coverage. An insurance broker can help, as they will be familiar with a variety of past cases.

For example, if claims aren’t fully covered by the condo’s commercial policy, you may be asked by the condo association to contribute towards them. In this event, contingent coverages will kick in to protect you, as long as you have the right policy for the specific event. There are a couple of ways this could happen:

Property Loss Assessments

If your building has been damaged by a storm, flooring, or a fire, the condo association may make a claim that exceeds their commercial coverage. In this case, condo owners will be asked to cover the difference. Property loss assessment insurance protects you from these situations, helping you avoid paying out of pocket, if a claim requires your individual contribution. Deductible assessment coverage will insure you against the cost of a deductible.

Liability Loss Assessment

In the event of a personal injury claim, if the condo corporation’s coverage is insufficient, the condo unit owners may be assessed to make up the shortfall for the condo association’s commercial liability policy. This could be split among owners or even a single person depending on the nature of the claim.

Despite your condo’s commercial coverage, you may find that some of your property isn’t covered. Here at Oakville Insurance Brokers, we offer comprehensive condo insurance to help you protect your property. Call us today at 905-845-0391 or contact us for more information.