Condo insurance (also known as Strata insurance in Western Canada) is another form of habitational insurance similar to home or tenant insurance but with notable differences, specifically tailored for condo owners.
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Condominium insurance responds to the risks associated with common areas owned by the condo corp. and your specific unit. It’s very important to know the definitions of what is “owned” and what is “not owned” as they can be different depending on the particular Condominium corporation.
Is Condo Insurance Mandatory?
Condo insurance is mandatory for a condominium corporation to have for common elements and the individual units for major perils such as fire and lightning.
Condominium insurance for the condo owner is often required by the condominium corporation. Although not legislated, a condo corporation will require a written agreement from you which clearly outlines your insurance requirements. It’s important to have a close look at the condo corps agreement which is supposed to clearly state what the requirements for insurance are, and anything else that might affect your risk exposure. Have your Insurance broker, agent or lawyer review the agreement and make necessary recommendations.
Mortgage Company may Require Condo Insurance
Condominium ownership may require purchasing condo insurance by a lienholder, for example, a Bank or Mortgage Company. This protects the lienholder from losing their investment in the condo should something bad happen. This is another example where having condominium insurance is not legislated but required by anyone or anything that has a financial interest in that condo or property.
Condo Insurance Coverage Explained
Condominium insurance coverage protects:
- Your Contents or Personal Property – this covers your personal belongings, similar to other habitational insurance policies
- Additional Living Expenses – this covers any additional living expenses that you might incur if your unit is deemed unfit to occupy by an insured peril. An example would be if your condominium caught fire, making your condo unfit to live in. The price of lodging and feeding yourself and your family are typically what is covered under additional living expenses.
- Unit Improvements, Contingency, and Loss Assessment Condo Insurance Coverage– this covers upgrades to your Units and any insurance levies imposed by the Condo Corp. if their insurance coverage is inadequate. Speak to your insurance representative about this for more detailed information.
- Legal liability – liability protection from a condo insurance policy is very similar to legal liability coverage from any habitational insurance policy. Legal liability protection provides insurance coverage for any damages or injuries you cause to a third party, in which you are legally liable for. The scope of insurance coverage is usually worldwide.
Condo Special Assessment Insurance
Condominium special assessment is a term used by people to describe specific insurance coverage for condominium owners. The formal name for “condo insurance special assessment” is:
Contingency Coverage – as mentioned earlier, this insurance coverage is specific to condo homeownership. Contingency condo insurance coverage is meant to protect the condo owner from being levied additional insurance fees should the primary insurance policy of the condo corp. prove insufficient to cover a loss.
Loss Assessment Coverage – this insurance coverage is also specific to condominium insurance. Loss assessment coverage is very similar to “contingency coverage”, in that, it provides coverage for monetary levies that can be imposed by the condo corp. for insufficient insurance coverage for common areas. The condo corp. and the condo unit owners share responsibility for loss exposure to common areas, should the primary policy of the condominium corporation fall short.
Condominium Liability Insurance
Condominium liability insurance is essentially the same liability protection you would see in a homeowner’s or tenant’s insurance policy. Coverage for legal liability should cover you anywhere in the world, up to your policy limits and subject to limitations and restrictions. Liability coverage that is covered also provides legal expenses coverage. Confirm with your insurance representative what your liability limits are always consider increasing coverage limits, especially as society is becoming more and more litigious.
Condo Improvements and Betterment Coverage
Condo policies have unique features specific to condo ownership. One of those features is called Improvements and Betterment insurance coverage.
Improvements and betterment condo coverage protect the extra added improvements and enhancements you make to your unit. Some examples are custom cabinetry, upgraded kitchen bathrooms, and even sometimes structural changes within the unit.