Insurance

June 27, 2024 Published by Huronia Chapter - By Sandy Fantino, Ceri Morris

Understanding Condo Unit Owner Insurance: Why It’s Essential

From the CCI Huronia Spring/Summer 2024 Condo Buzz Newsletter

In the realm of homeownership, Condominium living offers a unique blend of convenience and community. It is crucial for owners to understand the importance of having Condo Unit Owner insurance. In Condo insurance, there is a master policy, purchased by the Condo Corporation as well as individual Condo Owner policies, purchased by each Owner in the property. Unlike homeowners’ insurance, Condo Unit Owner insurance serves a specific purpose tailored to the needs of Condo residents and the Corporation’s master insurance policy coverages.

Protecting Personal Belongings

The primary reason Condo Unit Owner insurance is vital is its role in protecting personal belongings. While the Condominium’s insurance covers the building structure and common areas, it doesn't extend to Unit Owners’ personal property. In the event of unforeseen disasters such as fire, theft, or sudden water damage, Condo Unit Owner insurance should provide adequate coverage for personal possessions such as furniture, electronics, clothing, and more. Without this coverage, Condo Owners could face significant financial loss trying to replace or repair their belongings. It is important to have an insurable value in mind for all your belongings.

Most Condo insurance insures personal property for its replacement value. In choosing a personal property limit, consider the cost of replacing your belongings, not their cash value. For example, an old couch may not be worth $100 now, but if it would cost $800 to buy a new similar couch that’s the value it should be insured for and what the policy would pay.

Liability Coverage

Liability coverage is another crucial aspect of Condo Unit Owner insurance. It safeguards Condo Owners from potential lawsuits in situations where they may be held responsible for bodily injury or property damage to others. For instance, if a guest sustains an injury while visiting your Condo or if you accidentally damage a neighbor's property, liability coverage can help cover legal expenses, medical bills, and damages awarded in a lawsuit. This protection offers peace of mind and shields Condo Owners from financial repercussions resulting from unexpected accidents.

Additional Living Expenses

In the unfortunate event that your Condo becomes uninhabitable due to a covered peril, such as a fire or natural disaster, Condo Unit Owner insurance typically includes coverage for additional living expenses. This provision helps offset the costs of temporary accommodation, meals, and other necessary expenses incurred while your unit undergoes repairs or reconstruction.

Additionally, if you’re ordered to evacuate your home due to an event that would be covered by your policy (like a wildfire), you can use your additional living expenses coverage too.

Loss Assessment Coverage

Condo living often entails shared responsibilities and liabilities within the community. In certain situations, such as damage to common areas or legal judgments against the Condominium Association, individual Unit Owners may be subject to loss assessments.

A loss assessment is a one-time payment assessed to each Unit Owner, meant to cover a specific expense that is not adequately covered by the Corporation’s reserve fund. Even though the Corporation has an insurance policy, the deductibles are high (often more than $100,000). Loss assessments may also be issued to cover these deductibles, if necessary. These are sometimes known as deductible chargebacks.

Condo Unit Owner insurance typically includes loss assessment coverage, which helps protect owners from unexpected financial burdens arising from these assessments. Whether it's for repairs, legal fees, or other communal expenses, this coverage can be invaluable in mitigating financial risk for Condo residents.

Improvement Coverage

A Condo Corporations’ master policy covers each Unit as it was originally constructed. However, any improvements made to the Unit (like new flooring or cabinets) are not. Each Unit Owner must have their own insurance coverage for any such improvements. Coverage for improvements is essential for Condo Owners to safeguard their investment in upgrading their living space. Without adequate insurance protection, owners risk losing the value of their improvements in the event of unforeseen disasters or incidents. By including coverage for improvements in their Condo insurance policy, Owners can have peace of mind knowing that their investment is financially protected.

When considering improvements to the Unit, Condo Owners should consult with their insurance provider to ensure that the upgrades are properly documented and included in their policy. Providing accurate information about improvements helps in determining the appropriate coverage limits and ensures that owners receive adequate compensation in the event of a claim.

In essence, Condo Unit Owner insurance is a fundamental component of responsible Condominium ownership. Beyond safeguarding personal belongings, it provides essential liability protection, coverage for additional living expenses, safeguards against loss assessments and protects your improvements to the unit.

Basic Condo insurance policies usually include coverage for personal property, liability, and additional living expenses. Coverages for improvements and loss assessments are often extra add-ons, but they’re highly recommended for any Condo Owner. Some providers offer all-in-one Condo insurance bundles with which you can add these important optional coverages without having to worry about whether you are adequately insured.

With customizable options to cater to diverse needs, Condo Unit Owner insurance offers peace of mind and financial security in the face of unforeseen events. By understanding its importance and securing adequate coverage, Condo Owners can navigate the complexities of homeownership with confidence and ease.

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Sandy Fantino & Ceri Morris
BFL Canada Insurance