As an owner of a condominium or perhaps a potential purchaser, there are 2 very simple things you need to understand about insurance. (Of course, there are many more than two things involved in this subject, but only two are critical if you’re worried that the subject will be a good cure for your insomnia… these are the important two, so pour the coffee and stay with me on this.)
Number One: The Condominium Corporation is required by provincial legislation to carry general liability, Directors & Officers, Errors & Omissions and machinery & equipment insurance and the Corporation’s bylaws can stipulate other coverage regarding the Corporation’s operations. These documents ensure that as an owner, your interest in the condominium as a whole, is protected. (This is also the insurance that your mortgage company will want to know about.)
If fire damages or destroys the building or a block of townhouse units, the Condominium’s insurance policy will cover the repair or replacement costs and owners will not be required to pay the rebuilding costs.
Your monthly fees include your share of this cost to the property as a whole.
Number Two: The Condominium’s insurance will not pay for your Uncle Bob’s lost wages when he trips on the ottoman in your den and breaks his leg. It will also not replace your puffy-white-cloud sofa when your red wine juggling routine goes awry.
These types of claims – personal liability and damage to personal property (alone) must be addressed through your own personal insurance policy. Specific coverage for condominium owners is available from most insurers and is generally more affordable than standard homeowner’s insurance, since your insurer is not liable for covering the cost of replacing the structure itself – rather, just the contents and (depending on your Corporation’s bylaws) any improvements you make to the interior of the structure. Your broker can help you to find the most appropriate coverage for your needs. (Hint: if you currently don’t have a broker or would like a competitive quote, you may want to check with your Condominium’s broker for a quote – some will offer discounts for owners in a property they cover.)
What you need to be aware of is that there are two types of insurance and that one is entirely your responsibility.
Recall the poor souls you’ve seen on the news whose condos were damaged or destroyed by fire – their unit will be repaired or rebuilt, but their personal belongings won’t be replaced if they didn’t have their own policy for contents. A final note in this regard – and this one should keep you from nodding off – is to be sure that your personal policy will pay any deductible that you may be responsible for. This situation can happen to anyone and certainly has in the past – you forget to close the bedroom window before you leave at Christmas – your pipes freeze, burst and flood your neighbour’s units. While the Corporation’s insurance will respond to the claim, you can be held responsible for the deductible amount. With this coverage on your personal policy, you won’t be out-of-pocket for this mishap (unless the Condominium’s insurance premiums are increased next year as a result of the claims history, in which case – all owner’s fees may be increased to cover the additional cost.)
Of course, this is a far more complex topic than what can be represented here before we have you looking for a pillow and blanket, so if you’re interested in more in-depth information, speak to your broker and/or your Condominium’s broker about further details.