Condo Insurance Coverage Explained

Under Section 99 of the Ontario Condominium Act, a condo corporation is required to obtain and maintain insurance for both itself and on behalf of the unit owners against major perils such as:

• Fire
• Lightning
• Smoke
• Windstorm
• Hail
• Explosion
• Water escape
• Strikes, riots or civil commotion
• Impact by aircraft or vehicles
• Vandalism or malicious acts
• Any other event specified in the condo corporation’s declaration or by-laws

While it seems like quite an exhaustive list, it doesn’t even come close to what could actually happen in a condo.

Consider a scenario where your upstairs neighbour fell asleep with the bath running and flooded your apartment.

Or what about if a guest slips on the ice outside the front door of your building, sues the condo corporation and is awarded a settlement that goes beyond what the condo board’s insurance is authorized to pay out?

In the first case, the condo corp’s insurance won’t cover the cost because the damaged property isn’t a common area, nor was the damage caused by one of the perils their policy most likely covers.

In the second case, each owner would be responsible for an equal share of the difference.

Without home or condo insurance, the money to pay for each is coming out of your pocket. With home or condo insurance, you’re sleeping easy knowing your costs are covered (minus your deductible).

And with the right home or condo insurance policy, the coverage would include living costs if you have to move out and replacement costs for damaged floors, furniture and anything else you may have lost. It could also include funds to retain a lawyer if a suit is brought against you or you have to bring a suit to someone.

But more than any of that is this truth:

The likelihood of an upstairs flood or slip and fall happening rests on the flip of a coin. Either could happen tomorrow, and you could be negatively affected whether you were in the country or not, much less the building.

For these reasons, it’s a good idea to understand the ins and outs of what condo insurance covers.

First things first: condo insurance vs. home insurance

All condo insurance is home insurance, but not all home insurance is condo insurance.

A home insurance policy on a house or town home will cover most if not all of what a condo insurance policy covers, and will also cover the exterior of the structure and the rest of the property. The comprehensiveness of this coverage is reflected in the price.

Condo owners insurance doesn’t need to be that comprehensive because the condo board’s insurance policy (which they’re mandated to carry) covers the exterior and the property.

As a condo owner, you’re more than welcome to get yourself a regular home insurance policy, but you’d be overpaying. A condo insurance policy makes the most sense.

Condo insurance explained: what does condo insurance cover?

Insurance providers offer two types of condo insurance: one for owners and one for condo corporations.

Policies for corporations typically cover the exterior of the building, the inner workings (like elevators and HVAC) and common or shared areas like hallways and pools. In some cases, the corporation’s policy — also called the master policy — is extended to cover elements of the individual suites like ceilings, floors and walls.

Condo owners insurance offers protection against the cost of damages within the policyholder’s personal space and can protect them against surprise special assessments and unforeseen legal costs.

A quality condo insurance policy will cover:

Dwelling

This feature of your condo insurance policy will provide you with the funds to rebuild the interior after damage: putting in a new kitchen island, replacing cabinetry after a fire, replacing floors after a flood, etc.

Liability

If someone is injured in your suite and subsequently sues you, this covers your legal costs and any medical fees you are mandated to pay. It also covers any damage you may do to someone else’s property, like if you were the one who fell asleep with the bath running.

Personal Property

Nothing in the master policy will protect anything to do with your personal belongings in the condo, even if the building is picked up by a tornado and thrown across town. This element of your condo home insurance will cover the costs of repairing and replacing furniture, clothing, kitchenware, musical instruments, computers, phones and tablets, TVs, gaming devices, bicycles, sporting gear, jewelry and more.

Loss assessment coverage for condo owners

Your condo insurance special assessment coverage is known as loss assessment coverage. It’s usually offered as an optional addition to a condo insurance policy and is one hundred percent worth considering because it addresses a massive risk of condominium ownership: special assessments.

Coming home to an official letter in your mailbox informing you of your obligation to come up with $35,000 in two weeks or risk losing your condo is not the best way to end a long day at work. But it can happen that quickly.

Having condo insurance gives you peace of mind that you'll be covered for your share of any special assessment caused by an insured peril. Always be sure to check your policy for details about your coverage.

The average cost of condo insurance

While the benefits are overwhelming, you may still be wondering: how much is condo insurance?

Across Canada, the average condo insurance cost is between $27 and $33 per month, but rates in Ontario are rising quickly due to (a) the growing number of extreme weather incidents that are leaving insurance companies short, and (b) the shrinking number of insurance companies willing to offer master policies to condo corporations. For these reasons, taking the time to seek out the best condo insurance companies in Ontario is a wise move for anyone looking for a condo insurance policy.

Another reason to be extra judicious when seeking out quotes for condo insurance is the amount of competition in the condo home insurance market. The more you compare, the more likely you are to find a product that makes perfect sense for you at a price that suits you and your family situation.

Condo insurance in Toronto

The Toronto Star took an in-depth look at the rising condo insurance rates in the city and what it means for condo ownership moving forward. Among the trends mentioned in the piece, a more alarming one was condo corporations moving to limit what’s being covered by master policies, leaving more responsibility for individual owners.

Besides being grossly unfair to make owners financially responsible for other owners’ negligence, this trend will push personal condo insurance rates higher because more will have to be covered by personal policies.

For this reason, buying a condo pre-construction, being an original owner and having a say in the building bylaws specifically related to the type of master policy it takes out will save you from being exposed in the future.

Another quick note about pre-construction condos

If you’ve put down a payment on a pre-construction or mid-construction condo, you’re not required to hold condo owners insurance because you don’t technically own the unit yet.

In fact, you probably won’t need condo insurance when you move in, as you won’t actually own your place until it’s registered with your local government. This takes a few months after residents have moved in, and you’d only require renters insurance for that time period. Once the building is registered and ownership transfers to the condo corporation and owners, condo insurance is recommended.

Getting a condo insurance quote

Home insurance providers will almost always offer condo insurance. And like home insurance, all condo insurance policies will differ in coverage, cost, lifespan and how they’re administered.

Keep these considerations in mind when you’re shopping around for traditional or online condo owners insurance:

Coverage

You’ll want to make sure your coverage is appropriate for your building and your condo board’s master policy. For example, the chances of damage to a common area increases by the number of these areas. If you live in a building with a pool, gym, party room, library and a non-comprehensive master policy, a more comprehensive condo policy would be prudent.

At the same time, other elements of what condo insurance covers can be dialled back if they don’t apply to your building, unit or personal situation. For example, if you’re a minimalist without many personal possessions, the personal property of your coverage doesn’t have to be that extensive.

Cost

A smaller monthly premium is obviously preferable to the average condo insurance cost, but always check the features of an inexpensive policy, as many are too good to be true in the form of significant coverage dial-backs.

Administration

The claims process will differ by insurance provider and some make it easier than others. If you’re in your prime earning years and working 60+ hours a week, anything you can do to smooth out processes (like making an insurance claim) will be a good thing for managing your calendar.

Town house insurance coverage

The town house is the natural middle ground between the community living in a condominium and the living space of a house. In most cases, both home insurance and condo insurance could be appropriate, and ultimately it depends on the way a town home is built and what’s covered by the master policy. If you live in one of the bookend homes in your town home block, you should be extra diligent in your comparative shopping to make sure you have the coverage you need.

Do you need condo insurance if you’re renting from someone else?

While you may think condo insurance is necessary when renting a condo, the product you’d want to seek out is actually renter’s insurance because the integrity of the space isn’t your responsibility.

Renters insurance for condo dwellers will cover personal possessions and liability if someone is injured in the condo or the actions of the owner cause damage to someone else in the building.

A final point about condo insurance for first-time condo buyers

Buying your first condo is an exciting time for a number of reasons (homeownership, new responsibility, different area). But maybe the most exciting aspect of buying a new condo is the possible expansion of your social network.

In a condo, the building becomes your community, your floor becomes your neighbourhood and the people on your floor become your neighbours.

Like the relationships in any neighbourhood dynamic, you have an unspoken responsibility to make everyone’s living experience better. Part of that is taking every reasonable step to ensure this. One of those is condo insurance because it helps get necessary expenditures executed quickly so everyone in the community can get back to living their lives.

Making your neighbours wait for you to come up with the money in the event of a special assessment won’t exactly endear you to them.

For all the reasons mentioned here, condo insurance is a good idea

Condo insurance isn’t mandatory. If you think you have the liquidity to come up with the money for a surprise special assessment or to renovate the interior of your unit after an accident, then you don’t need condo insurance. But if you’re like 99 percent of the population who would have trouble coming up with that kind of money in a short timeframe, condo insurance, special assessment coverage and all the additional perks will make your life so much easier.

Bottom line: If you’re going to live in a condo, you should very much consider taking out a condo insurance policy.