With condos increasingly viewed as a viable alternative to single detached homes it's necessary to understand the particular quirks of condo insurance.
Like a Tenant's Policy
Like a tenant's policy you'll need an idea of the "Replacement Value" of all your possessions; including clothing, furniture, linens and bedding, electronics, pots and pans, dishes, glasses and cutlery, the food in the fridge and freezer and pantry, beer and liquor and including all the appliances; everything. In estimating the "Replacement Value" of everything, please use "full price" rather than "sale price". Why? Because after a fire you'll want to replace everything as quickly as possible.
Not Like a Tenant's or Homeowner's Policy
Unlike a tenant's or homeowner's insurance policy Condos have standard unit definitions. The standard unit defines what is considered the responsibility of the condo unit owner to insure and what the condo corporation is to protect. The condo corporation is responsible for insuring all the common elements, and also for insuring the "standard unit". You will need to insure all your own possessions and the "betterments and improvements" in your new condo unit, things that are considered more valuable than the standard unit.
All the Improvements and Betterments Can Add up to Tens of Thousands of Dollars
For example the condo corporation could have the standard unit defined such that it does NOT include any interior trim (such as baseboards, or interior doors, or shelving), or any flooring materials above the sub-floor (such as under pad, or carpet, or ceramic tile, or hardwood, or linoleum), or counter-tops (not even very ordinary kitchen and bathroom counter-tops), or any wall coverings (such as primer, paint, or wallpaper), or any window coverings (such as curtains, shutters, or blinds). Under this example all this would be considered an "improvement" to the unit; and YOU are responsible to insure it.
If there have been any upgrades to such things as the bathtub, or toilets, or sinks, or showers, or medicine cabinets, or plumbing fixtures, or light fixtures, or kitchen exhaust fan, or bathroom vent, or closets (including linen closet), or kitchen cupboards and cabinets, or bathroom vanities then the EXTRA cost of the upgrade is considered a "betterment"; and YOU are responsible to insure it. (For instance, a Builder's Standard bathtub might cost $600 ... but if the previous owners put in a fancy $2,000 whirlpool-style bathtub, then you've got a $1,400 "betterment" that you need to insure.)
Condo Insurance Policies Cover Improvements and Betterments
Most condo unit owner insurance policies provide coverage for "betterments and improvements." Some companies lump them in with your belongings, but only to a certain percentage; others as an additional coverage, with a limit based on a percentage of your contents (read possessions) limit. For proper protection you'll need to get a fairly good handle on the approximate dollar values you'll have for your belongings as well as the approximate dollar value you'll have in "betterments and improvements".
Three Important Elements to a Condo Policy
1) Most insurance providers will sell you a policy with $1 million Liability coverage. For units in high-rises, that's no longer enough. We've heard of a fire in a high-rise unit, for instance, which caused smoke damage to many other units on the same floor and on the floors above; water damage (from the fire department) to adjoining units, and to many units on the lower floors. That can add up to a lot of liability. An increase to $2 million for liability protection will cost about $25 per year extra and it's well worth it.
2) As we've mentioned above the condo corporation is responsible for insuring the "Standard Unit," but most condo corporations have really high deductibles on their insurance policies and the individual unit owners are responsible to cover the corporation's deductible. What does that mean? You could be blindsided with a bill for $5,000 or $10,000 or even more, for repairs that you THOUGHT the condo corporation was going to be looking after. Not all insurance companies address this issue in their Condo unit owner's policies so the unit owner is left in the lurch. There are insurance companies that provide relief for this sort of occurrence; and it's one of those cases where it's important that you ask the right questions and look at the fine print.
3) The condo corporation is responsible for insuring the common elements such as the lobby, the elevators and hallways and staircases, the sauna, the tennis courts, etc. However, there have been instances where the corporation's coverage was woefully inadequate, or where there was no coverage at all because payments were missed and policies cancelled. As a result, the individual unit owners were all subject to a special assessment to cover the costs of repairs. Various insurance companies address these special assessment situations differently; and you want to make sure that your policy provides a sufficient level of coverage for this type of situation.
Get an Expert for Your Condominium Insurance
Having a broker, who looks to understand your needs, and who can match your situation with the best condo policy will provide you with peace of mind, will give you the best protection.
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