Insuring Your Condo

By Barbara Lawlor

Buying a new home is a big step for anyone and involves a lot of “homework” on your part to ensure that you know exactly what you are getting into. As with low-rise homes, insurance is an important factor in a condominium purchase, and one that deserves thoughtful consideration. First-time home buyers, and even seasoned home buyers who are purchasing a condo for the first time, may assume that the parameters are the same when in fact, there are differences.

I doubt that anyone would deny the critical nature of having a home insured. Keep that in mind when you look at the maintenance fees, because these include the insurance the condominium corporation takes out on the building itself. This cost may run approximately two per cent of the condo budget.  And remember that if you choose a low-rise home, you have to pay insurance too.

Condominium homeowner insurance is more complex, however. Condominium corporations differ from building to building, with only a few elements in common among them. Condo corporations, for example, insure from the walls out, according to the declaration. Read this document carefully and be sure you understand just what is covered by the insurance purchased by the corporation. These would be items such as the roof, exterior, driveway, underground garage and amenities. Again, coverage is not standard, so it is important to check.

Suite owners need to insure the unit from the walls in. Unlike rented apartments, where the suite owner is required to insure his or her contents (clothing, furnishings, etc.) only, a condo owner must insure the contents AND also the fixed items such as counters, cupboards, vanities and the like. These are attached parts of the suites, and you are responsible if anything happens to them. This includes, by the way, what companies call “betterments” or upgrades or improvements you make to these items.

As with low-rise homes, condominium suite insurance takes effect when the unit legally closes. It is a good idea to get the condominium declaration as early as possible so you can present it to your insurance company and have the pro’s help you determine the coverage that is best for you.

As with any home purchase, asking for advice is a wise move. Find out how your friends or relatives who own condominium suites handle insurance. Ask if there is anything they would do differently. Speak with your insurance agency and ask whether that firm regularly insures condominiums. If not, you may want to seek a firm that is up to date on condo requirements.

Pay attention, too, to your contents insurance. So many people neglect this aspect and then end up regretting it after a fire or robbery. If you have expensive jewelry, arrange for a rider to your contents insurance. And what about other things? Do you have valuable antiques? Collectibles? Heirlooms? Artwork? I am talking about items that would be particularly costly to replace, should they be taken or damaged. And remember that if you have a storage locker in your condominium, you need to insure the contents of that unit as well.

There are specially designed Condominium Owners policies and extra riders you can get for things like additional living expenses if your suite becomes uninhabitable because of a loss. Remember, too, personal liability insurance to cover your legal liability someone visiting your suite suffers an injury or loss to his or her property.

Be sure to check with your condominium corporation as to whether you are responsible for the deductible under the policy taken out on the building. This can be substantial. And if you are intending to rent out your condominium suite to someone else, ask about insurance under these circumstances. At the very least, the tenant should purchase contents insurance.

Condominium living is wonderful and well worth the effort it takes to understand your condo documents and research what you need to do to be comfortable in your suite.

Barbara Lawlor is president of Baker Real Estate Incorporated and an in-demand columnist and speaker. A member of the Baker team since 1993, she oversees the marketing and sales of condominium developments in the GTA and overseas. Keep current with The Baker Blog at blog.bakerrealestate.com