As a condo owner, do you have to worry about insuring your unit? After all, isn’t the condo corporation responsible for insuring the building?
The thing is, a condo association’s insurance policy does not cover each individual unit. While it covers the exterior of the building, the interior of your unit is not insured by your association’s policy, in which case you would be responsible for insuring yourself.
This can be done by taking out a condo insurance policy, which will protect everything within the four walls of your unit, including your personal possessions.
Let’s take a closer look at condo insurance to help you customize the ideal policy for you.
Insuring A Condo
Insuring a condo is a much more complicated process than insuring a home. This is because you are sharing the building, its utilities, and all its issues with other people and because of this, unexpected accidents can occur. Additionally, you’ll more than likely have to pay for more than a single insurance policy (when you own a house, you only need one policy).
Check out the pros and cons of buying a house vs a condo.
Types Of Insurances
When purchasing a condo, you may be required to pay for several types of insurances
- Commercial Condo Insurance – This policy is owned by the condo association and covers the main structure of the building and common areas (you’ll contribute to this with your condo fees).
- Personal Condo Insurance – You own this policy and will be responsible for setting it up. It will cover the condo’s appliances, upgrades, personal liabilities, personal belongings, and theft from your unit.
- Tenant insurance – You own this policy and it might be required if you’re renting a condo unit that you do not own.
Learn more about when you may need tenant insurance.
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READ ARTICLEWhat Is Condo Insurance?
Condo insurance is a type of property insurance that covers personal belongings and improvements made to the condo unit you own. It does not cover the external areas of the structure, which are the responsibility of your condo association.
Instead, it provides coverage for the interior walls, appliances, and contents of your condo. This policy also covers you against any liability if you are responsible for the injury of another person or damage to their property.
Find out if you need insurance for an unoccupied home.
How Does Condo Insurance Work?
Much like a traditional home insurance policy for a free-standing home, a condo insurance policy is taken out with an insurance company that will pay out financial compensation when a claim is made.
When you apply for a condo insurance policy, the insurer will assess the chances of you filing a claim in the event of property damage, theft of belongings, or personal injury. You will receive a quote based on that assessment and will pay your premiums accordingly. As long as you keep up with your premiums, you will be covered according to your contract.
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In addition to protecting the interior walls, appliances, and personal possessions contained within the unit, your contents will also be covered when you are travelling with them or if they are stored in a locker.
While this type of insurance is not legally required, your condo association and mortgage lender will likely require that a policy is in effect. This will minimize their risk if there is any damage done to your condo, which can negatively impact the value of your unit and those around you.
Check out what is landlord insurance and find out if it’s right for you.
What Is and Isn’t Covered By Condo Insurance?
The following items are typically covered under a standard condo insurance policy:
| Contents | Your personal belongings will be protected if they are damaged or stolen. This includes items that are stored in your condo-assigned locker. However, very valuable possessions may not be covered, such as specific jewelry or artwork, if they are over a certain value amount. You may need additional coverage for these types of possessions. |
Improvements | If you have made any upgrades within the condo, such as the installation of new granite kitchen counters or new hardwood flooring, you will be covered for these improvements if they are ever damaged. |
Personal Liability | This portion of your policy will protect you if you are ever sued by an individual who injures themselves or has their property damaged while visiting your unit. It also protects you from any damage you may have caused to other units, such as flooding as a result of leaving the faucet running, or pipe backup by washing garbage down the sink. |
| Temporary Accommodations | If your unit is deemed uninhabitable because of extensive damage that forces you out, you will be compensated for temporary living arrangements until your unit is fully repaired. |
Standard Condo Insurance
A standard condo insurance policy usually will not include the following items:
- Expensive jewelry or other high-value items. The majority of policies usually have a limit on jewelry coverage, which may not be enough to protect all the valuables that you have. You may need additional coverage in this case.
- Exterior damage. Most exterior spaces are covered by your condo corporation, but you may still want to find out exactly what is in their policy. You may need additional coverage if an exterior space or item is not protected.
- Flooding. Water damage from floods is usually not covered by a condo insurance policy, nor would your condo corporation’s policy cover it.
- Unspecified perils. Condo policies usually include listed peril, so if there is something that is not specifically listed, it is probably not covered.
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Optional Coverage
You may also have the opportunity to add optional coverage, such as the following:
- Valuable Items – Standard condo insurance policies typically do not cover high-ticket items like valuable artwork or jewelry. You can, however, add optional coverage to protect these assets.
- Sewer Backup – If wastewater ever makes its way into your condo as a result of sewer backup, this optional rider will cover you for damages caused.
- Overland Water Flooding – Water that makes its way into your condo from overland water and causes damage can be covered under this optional coverage component.
- Identity Theft – If you are ever the victim of identity theft, having this added rider can compensate you for any damages caused as a result.
- Loss Assessment – While your building is insured under the corporate insurance policy, there may be times when the cost of repairs is much higher than the corporate coverage. In this case, any excess costs are divided among unit owners. Loss assessment insurance can cover you so you don’t have to pay out-of-pocket for such repairs.
As A Condo Owner, Do I Need Condo Insurance?
As mentioned above, it’s not legally required to have a condo insurance policy as an owner of a unit in a condominium. However, you will likely need to take one out anyway as per requirements from your lender and condo association.
Besides, having a policy like this in place can give you peace of mind knowing that you won’t be on the hook for paying for damages associated with damage, theft, or litigation.
If you rent a unit from a condo owner, you do not need an insurance policy, as the unit itself is already insured by the owner. However, your landlord may require you to buy coverage to reduce their risk.
Plus, you may want to consider taking out a policy anyway to provide you with similar protection that unit owners receive from having a policy in place.
Do you often rent out your house? Then you may need tenant insurance.
How Much Does Condo Insurance Cost?
The cost of your condo insurance policy can range quite a bit depending on the exact circumstances. That said, the average policy ranges anywhere from $25 to $60 per month for owned units. If you rent your condo, you could pay as little as $10 a month, with the cost rising depending on the size of the unit, the building itself, and its exact location.
Several factors influence the cost of your policy, including the following:
- Location – An area with a high crime rate may cost you more in premiums because of the higher risk associated with theft and vandalism.
- The building – The age, condition, and construction of the building that your unit is located in play a role in your premiums. Older buildings that are in need of repair may cost more in condo insurance.
- Coverage – You have some flexibility when it comes to what you want to be covered. The more coverage you want, the more it will cost you.
- Deductible -If you ever have to file a claim, you will need to pay a deductible first before your policy kicks in. A higher deductible usually means lower premiums, while a lower deductible means higher premiums.
- Contents – While your policy will protect your belongings, there is usually a cap on how much you will be compensated for if you ever have to file a claim. If you have a lot of valuables in your unit, you may want to pay a higher rate to lift that cap.
- Proximity to a fire hydrant or fire hall – Like traditional home insurance, your insurer will want to know the distance of your unit and building to the nearest fire hydrant or fire hall. The closer, the better for your premiums.
- Personal profile – Your age, gender, and lifestyle will also impact how much you pay for insurance. Generally speaking, a young male who smokes will have to pay more for insurance than an older female who leads a healthy lifestyle.
- Claims history. The more claims you’ve made in your past, the riskier you may be considered to your insurance provider. In this case, you may find yourself with higher premiums as a result.
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Condo Insurance Tips
If you’re planning on purchasing condo insurance, there are a few things you should keep in mind. Here are some tips when getting your insurance policy:
Storage Locker
If you have a storage locker, make sure your insurer is aware so it can be included in your policy.
Valuable And Sentimental Items
If you own any expensive items, make sure you have coverage for all non-standard, valuable objects you have in your condo. This includes items such as expensive jewelry, costly music instruments, and sporting equipment. Artwork and wine collections have to be considered separately.
Home Sharing Programs
If you participate in any home-sharing programs, make sure you inform your insurer of this activity. An example of this would be a program like Airbnb. If you forget to tell your insurer, they may refuse to pay your claim if any damages occur.
Condo Insurance FAQs
Do I need to get condo insurance if my condo building is already covered?
What is commercial condo insurance?
Does condo insurance protect you from third-party liability?
Final Thoughts
Like a traditional home insurance policy, condo insurance is designed to protect owners from damage or theft done to their property or belongings. Luckily, condo insurance tends to be more affordable than a policy for a single-family home, but it’s just important to have. Be sure to arm yourself and your condo with a comprehensive policy that offers adequate coverage for your unit and the contents within it.
