Condos are an increasingly popular property choice, whether you're a first time home buyer, a professional moving to a new city, or a retiree looking to downsize. Insurance is just as important for a condominium as it is for a traditional home, but there always seems to be confusion around what a condo policy covers. At its core, condo insurance covers your contents and liability, while the strata corporation covers insuring the structure. It's important for you to understand what's included in these policies and where you want to make sure your coverage is sufficient.
Upgrades to your unit
Condo insurance is different from home insurance in the fact that it does NOT cover a structure; however, as a condo owner you should be aware of betterments and improvements to the unit you own. Betterments and improvements refers to ANY upgrade of your unit from the original development. This would include any upgrades completed by a previous owner.
It is of the utmost importance to be aware of any upgrades done to your unit, specifically because the strata corporation insurance only covers the cost to rebuild the structure to the original construction. Always review the limit on your policy with your insurance broker to ensure there is enough to cover all upgrades to your unit.
Strata policy vs. Your policy
Another important aspect to condo insurance is the coverage for your portion of the strata deductible. In the event of a major claim, such as water damage or earthquake, the strata corporation will require all owners to pay a portion of the deductible. This can be thousands of dollars just for your portion, as the deductibles for these complexes are quite large. Be sure to inquire with your Strata Corporation or property management company what your portion of any deductible could be and review this figure with your insurance broker.
If you ever need to submit a claim that relates to the strata deductible, your policy will only respond and cover that expense if the type of claim is covered under your policy. For example, if you have declined earthquake coverage on your unit and the strata has an earthquake claim to the structure, your policy will not respond to pay your portion of that deductible due to the fact that you personally do not carry the coverage.
Final Thoughts
As with all insurance it is important to review your coverage and options to ensure you are not left with a large bill in the event of a disaster!
Home insurance is a key requirement for your mortgage. The Auxilium Team is happy to provide you with a referral to our trusted partners for a consultation and quote.
Auxilium Mortgage Corporation is based in Victoria, BC and works with clients locally and across Canada. The Auxilium team has over 100 years of combined financial experience and access to dozens of lenders to help you meet your goals.
