A housewarming party is super fun. But in a condo, a soiree gone south could leave you financially hungover. Or worse, the knucklehead upstairs could leave a candle next to a box of tissue. Imagine forking over a 6-figure downpayment in Toronto, then losing it all to happenstance. Uh oh, you should have had homeowners insurance for a condo!
Most condo buildings have a master insurance policy held by the condo association, but don’t let that trick you into thinking you’re covered. Because you’re not. Well, not entirely. Here are the top 5 reasons why you need homeowners insurance for a condo.
- What’s the difference between homeowners insurance and condo insurance?
- Is homeowners insurance for a condo really necessary?
- Do you need condo insurance or townhouse insurance?
- How much does homeowners insurance for a condo cost?
- Getting homeowners insurance for a condo
What’s the difference between homeowners insurance and condo insurance?
Both are a form of insurance that protects you, your home, and your stuff. In general, condo dwellers require different coverage than homeowners because you don’t own the building or land that your unit is located on.
Homeowners insurance is designed for single-family dwellings. You are typically provided with coverage for both your property and liability.
Condo insurance is specifically designed for multi-unit complexes. It typically provides coverage for damage beyond the basic structure of your unit as well as for your personal belongings. It also covers some liability-related incidents that occur within your unit or in common areas shared by all residents.
Therefore, condo insurance is homeowners insurance for your condo that has special coverage unique to the needs of condo dwellers.
Is homeowners insurance for a condo really necessary?
Yes, full stop. While it’s not a legal requirement, that only means the government can’t force you to have it, but someone else can. Most mortgage lenders require that borrowers have condo insurance before they’ll finance your purchase—so even if you think it’s unnecessary, chances are you won't be able to close the deal without homeowners insurance for your condo.
Besides your risk-averse mortgage lender, here are a few other reasons why you need home insurance for a condo:
1. The master policy is not enough
The condo association has a master condo insurance policy that covers “common elements,” like the building itself, common areas like lobby, halls, and elevators, as well as any on-site amenities like gyms or pools. This policy will also cover any damage caused to the basic structure of your unit by other owners in the building, such as water damage from an overflowing bathtub. Even then, it might not be enough.
The master policy does not cover your personal belongings. Nor will it have your back if you cause damage, loss, or harm to someone else or their property. That’s where your own homeowner's insurance comes into play, typically called condo insurance. It protects you from personal financial loss and liability in the event of damage, loss, theft, or vandalism.
2. Protect yourself from liability
Homeowners insurance for a condo typically comes with personal liability protection, like If someone gets injured while visiting you in your home. It also covers you if your guest or something you own causes damage to another person’s property or injures them.
Imagine being sued because your Sunday brunch turned into a bacon-grease fire! Big Yikes. If the repairman gets hurt in your unit, condo insurance can save you from expensive legal fees and even medical bills.
3. Protect your stuff
Picture this, Mr. Upstairs Neighbour left the bathtub running and flooded your home office through the ceiling. Homeowners insurance for a condo covers more than just the structure of your unit. It can also provide coverage for your personal items, like furniture and electronics. And depending on the policy you select, some may cover items like jewelry and artwork too.
You might not be able to replace the unboxed Han Solo figurine displayed proudly next to your computer, but at least you’ll be reimbursed the value. Not to mention, who has enough stacks on deck to replace everything they own? And what if the damage is so bad you can’t live in the unit until it’s fixed? Condo insurance can cover a hotel and meals until you can move back home.
4. Protect your investment
One of the best perks of condo living over apartment life is being able to hammer stuff into the walls, and a whole lot more. Even the most robust master policy won’t cover improvements you made like those Italian marble countertops, Smeg appliances, and heated floors.
But homeowners insurance for a condo can! You can take advantage of something called Improvements and Betterments coverage so that your dream kitchen doesn’t turn into a nightmare. Pro-tip, make sure all upgrades and renovations are thoroughly documented with your insurance provider.
4. Protect yourself from this surprise bill!
Remember that condo master policy, the one that only covers the basic structure of your unit and common areas? You have to pay for repairs if the claim isn't enough to cover the full cost, even if the damage wasn't your fault. This situation is called a special assessment and can really cause financial trauma.
If that bacon grease fire caused smoke damage in the hallway or a repair man hurts himself in the lobby, you could face a massive surprise bill. It's a bitter pill to swallow. With personal homeowners insurance for a condo, you can have something called condo special assessment insurance. This type of coverage can help pay your share of the cost.
Do you need condo insurance or townhouse insurance?
If you live in a townhouse, insurance can get a bit confusing. Let’s take a closer look at the differences between townhouse insurance and condo insurance so that you understand exactly what you need.
Townhouse insurance includes the same coverage as traditional homeowner’s insurance but also includes special coverage for common areas shared by multiple owners in a complex – like staircases, hallways, parking lots, and landscaping.
In addition to covering damage due to fire, theft, and other disasters it also covers your personal belongings inside the unit like furniture, appliances, electronics and clothing affected by an insured event.
Townhouse insurance policies also provide personal liability coverage if someone is injured on your property or if you are responsible for damages caused to another owner’s property.
Home insurance for a condo is called condo insurance and has unique coverage. It typically includes all of the same coverages found in a townhouse policy but also includes additional protection against water damage caused by flooding or plumbing issues, replacement cost coverage, additional living expenses if you must relocate while repairs are being done, and loss assessment coverage which helps pay for the master policy deductible or damages that exceed your policy limits if the condo association makes a claim.
How much does homeowners insurance for a condo cost?
Generally speaking, you can expect to pay between $200 – $500 per year for basic coverage. However, the actual cost of your condo insurance will depend on several factors, such as:
If your property is located in an area that is prone to natural disasters or extreme weather, chances are your premiums will be a bit higher than if you lived somewhere where those risks are lower. If you live in an urban area with a higher crime rate, you’re likely to pay more than if you are in a quieter neighbourhood. Location can also impact the value of your property, which impacts your premiums too.
Age of the building
Older buildings typically come with more potential risks due to aging plumbing systems and electrical wiring that may need to be updated or replaced sooner rather than later. As a result, these types of properties often require higher premiums in order to cover any potential losses resulting from those issues.
Improvements & personal belongings
Renovations and upgrades are not only more expensive to replace, but they can also increase the value of your property. Therefore, the improvements you've made to the unit require more coverage from your insurer. The same goes for the value of your personal items like furniture, electronics, expensive jewelry, etc — they too should be taken into account when calculating your policy premiums.
Getting homeowners insurance for a condo
Square One is an online insurance provider serving people in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario and Quebec. They offer some of best the rates on the market starting as low as $12 per month. Their Condo Insurance Policies are fully customizable and can include coverage for things like upgrades and renovations, personal belongings, liability, as well as coverage for the condo master policy deductible.
When shopping around for the best deal on homeowners insurance for a condo, it pays to do your research. Start by getting multiple quotes from different providers and compare condo insurance coverage side-by-side.
Make sure that each quote includes the same level of coverage so that you are comparing apples-to-apples when making your decision. Also, remember that cheaper isn't always better. Make sure that you are getting the coverage you actually need at a reasonable price before committing to anything.
The main difference between condo insurance and homeowners insurance is that homeowners insurance covers damage to both the structure of your home and its contents, whereas condo insurance only covers the contents within your home, like your personal belongings and improvements you’ve made to the unit. Both types of insurance usually provide personal liability coverage.
The cost of homeowners insurance for a condo varies depending on where you live in Canada, what type of coverage you choose, and other factors such as the age of the unit and if you made any improvements to it. Generally speaking, rates can start as low as $20 per month, which is much less expensive than a traditional homeowners insurance policy.
Condo insurance usually covers liability protection in case someone gets hurt while they are visiting, personal property coverage in case something gets stolen or damaged in your unit, additional living expenses in case you need temporary housing while repairs are being made, loss assessment coverage in case there are damages beyond what is covered by your condo association’s master policy, and special assessments in case there are unexpected costs associated with upgrades or repairs.
You could save thousands of dollars by comparing prices before you buy permanent or term life insurance
About The Author: Heidi Unrau
Heidi Unrau is the senior Finance Journalist at Hardbacon. She studied Economics at the University of Winnipeg, where she fell in love with all-things-finance. At 25, she got her first bank job as an entry-level teller. She moved up the ranks to Credit Analyst, Loans Officer, and now a Personal Finance Writer. In her spare time, you'll find her hiding in the car listening to Freakonomics podcasts, or binge-watching financial crime documentaries with a pint of Häagen-Dazs. When she's not chasing after her two little boys, she's in the hot tub or arguing with her husband over which cash back card to use for date night. She’s addicted to coffee, crypto, and obsessively checking her credit score on Borrowell.
Fun Fact: Heidi has lived in five different provinces across Canada, loves her free Tangerine bank account, and will never cut back on Starbucks. Like ever.
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