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Condo Insurance

Condominium Unit Owner Insurance

It is estimated that nearly 40% of condo owners in the lower mainland do not have their own condo insurance policy. One of the most common reasons provided by those condo owners that have gone without a condo owner policy was because they thought the major risks they face were already insured under the strata’s insurance policy. While many condo owners are aware their strata corporation’s insurance policy do not provide coverage for their personal contents, they are often unaware that there are other unique risks that condo owners face, which are generally not covered by a strata’s insurance policy. I have listed a few of the major risks generally not covered by a strata’s insurance policy below:

 

Personal Liability

While public liability is required to be insured by the strata corporation, personal liability is not, which is why it is often not included in a strata’s insurance policy. The desired limits for personal liability will differ for each condo owner so it is often a coverage that the strata corporations leave to the owners to handle independently. Public liability refers to the shared or common liability shared amongst all owners of the strata corporation. Personal liability refers to the liability arising out of your premises or personal action. For example:

 

Example 1 - you host a party and serve alcohol to your guests. One of your guests decided to drive home after a few drinks and caused an accident that severely injured several people. As the host, you could be found jointly liable for those damages. In the past, hosts serving alcohol have in fact been found liable for the actions of their guests. This is personal liability risk. There is a great article that discuss this risk, which you can find here (starting page 6).

 

Example 2 - you are drawing a bath, when you receive an emergency call and you had to leave to attend to this emergency forgetting that the tap was still running. The water overflows and causes water damage to 4 units below you. The owners of those 4 unit or their insurance companies may take action against you for damages they suffered as a result of your negligent actions. This is personal liability risk.

 

Loss Assessment

Loss Assessment is a unique risk to condo owners. Loss assessment refers to losses assessed by the strata corporation to its owners in accordance to the strata corporation’s governing rules / by laws. These assessments are usually made against owners as a result of inadequate limits of insurance on the strata’s insurance policy. For example:

 

Example 1 - a visitor to the building is injured when they slipped and fell in the visitor parking lot because the strata corporation did not arrange for proper snow removal and salting of the visitor’s parking lot. The visitor suffered significant injuries to her spine and became paraplegic. The visitor happened to be a prominent athlete and as a result of her injuries, will no longer be able to continue her career. The courts awarded her $8 million in damages, but the strata’s insurance policy only provides coverage for public liability up to $3 million. The $5 million shortfall in insurance would have to be paid by the strata corporation. The only way the strata corporation could generate the funds to pay for the damages not covered by insurance is to assess an amount for the loss to each condo owner. If there were 50 units, then each unit would likely be assessed $100,000.

 

Example 2 - there is major damage to the building as a result of a fire. The strata’s insurance company will pay for the damages, but there is a $50,000 deductible in the strata’s insurance policy. This $50,000 would be assessed to the owners. In some cases, if it is determined that the fire originated in a specific unit, the strata corporation could even assess the entire deductible to the owner that caused the fire, provided that the strata corporation’s governing rules / by laws permits.

 

A condo owner insurance policy (commonly referred to as condo insurance, contents insurance, and condominium insurance) would provide coverage for the above risks as well as other important coverage, such as:

 

Personal Property

A condo insurance policy would provide coverage for the owner’s personal property from theft, fire, vandalism, and many more risks. Personal property may include clothes, furniture, appliances, electronics, jewelry, art, collectibles, and much more.

 

Loss of Use

A condo insurance policy would provide coverage for loss of use of the unit. For example, the condo unit suffered major damages as a result of a fire and becomes temporarily uninhabitable. There would be additional living costs such as rent for temporary housing and possibly additional food related costs resulting from the loss of use of the unit. Condo insurance would provide coverage for those additional living expenses. This is a very useful coverage because quite often the unit owner would be required to continue making mortgage payments on the property despite the fact they cannot reside in it. Without this coverage, this additional living cost could become a significant financial burden.

 

Unit Improvements and Betterments

Quite often a condo owner will make improvements to their units. For example, a unit owner may add custom cabinetry or shelving to increase storage space. These additions or betterments are not considered as part of the building, as such they would not be covered by the strata’s insurance policy. Condo insurance would provide coverage for these additions and betterments.

 

The comprehensive condo insurance policies we offer, provide the above coverage and much more for as low as $15 per month.

 

If you are interested in obtaining a quote, please contact one of our insurance advisors to schedule a no-obligation personal consultation to help you find the right insurance solution to protect your investment.

Contents Insurance
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water damage