There are two kinds of insurance when it comes to a condominium.
The first is insurance for the entire condominium building including the suites and the common elements. It includes coverage for interior suite features, such as granite counters, kitchen cabinets, hardwood floors etc IF they were installed originally by the builder. The building insurance covers the replacement or repair of any of these elements due to fire, flood or any other kinds of damage.
But what that insurance doesn’t cover are the condo owner’s property inside the suite in case of fire, smoke or water damage, nor liability if someone in your unit is injured and sues you. It also does not cover any interior improvements you’ve made to the suite such as upgraded hardwood floors and so on. Like any homeowner, condo owners must take out insurance of their own to protect themselves.
But like any insurance policy, a condo insurance policy can have deductibles, which are the owner’s problem even if whatever happened wasn’t their fault. These deductibles can often be between $5,000 and $10,000, and these are repairs you’ll have to partially pay for. This can be a pretty hefty and unexpected expense for any condo owner.
For example, if water pipes inside a wall were to burst and damage your unit, you must pay the deductible before the damages are repaired. The pipes are the responsibility of the condominium, but you may need to prove they were negligent in court and the legal fees are highly likely to be higher than the deductible.
When you are investigating the condominium building insurance, note that a summarized insurance policy for the building is available in the Status Certificate package, and it will outline the deductibles.
Once you have your offer accepted, contact your own insurance company - maybe the one that has your auto policy for example - and ask them to quote you the cost of an condominium owner’s policy. They’ll ask for a list of your contents (furniture, electronics, valuables etc), a description of any suite upgrades from the original and then let you know the premium cost.
Question whether your own policy would cover your condo building insurance deductible in the event there’s an accident like the one described above.
A typical condo owner’s policy costs between $250 to $400 depending on the value of your belongings and any upgrades that your suite has from the ‘builder’s standard finishings’. You can elect to pay the premium all in one payment or spread it out monthly over the year.
Once you’ve decided on the insurance company you want to use, and the coverage that you want, you should ask your insurance broker for a Binder to show that you’ve got coverage once you take possession of your new home.
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