Do you live in a condo? Thinking about buying one? Consider condo insurance to protect your investment. Many people think condo insurance is mandatory, however, in Ontario it isn’t. But most condo buildings and mortgage lenders will require you to show proof of insurance before they loan you money or let you move in. Read on as we bust six myths about condo insurance:
Myth 1: my building has insurance, so I’m covered.
Your condo building has insurance, and each building’s insurance is unique, but generally it covers damage to the building’s furniture, equipment and the building’s common areas such as the lobby, stairs, elevators, hallways, pools, garages and recreational facilities. It DOES NOT cover your condo unit’s contents, damages within your condo unit or your liability. For example, if your bike is stolen from your condo unit, your condo building’s insurance will not cover this.
Myth 2: I don’t have anything valuable, so I don’t need condo insurance.
Condo insurance doesn’t just cover the contents in your condo unit. It also covers liability. For example if a guest slips on your balcony and needs medical attention, you may be liable. Your condo’s building insurance will not cover your liability for your guest’s medical treatment.
Myth 3: my condo insurance covers everything I own including my engagement ring.
Good for you for having condo insurance, however, it doesn’t necessarily cover everything in your condo unit, particularly more expensive items like engagement rings or collectibles. Your condo insurance policy will state what is covered and to what extent, so purchase an endorsement (add-on coverage) for valuable items if you need it.
Myth 4: my renovations and upgrades are automatically covered.
Upgrading your bathroom with new subway tiles and heated floors? Renovating or upgrading means changing your condo unit, which could mean your condo insurance policy may not be valid anymore. Before making any upgrades or renovations, call your insurance company to ensure you have suitable coverage.
Myth 5: I don’t need to worry about my neighbours – they have their own insurance.
While your neighbour should have condo insurance for their unit, you still need it in case you cause damage. For example, if your sink clogs and causes water damage to your neighbour’s kitchen, you are responsible for the replacement and cost of the repairs, not your neighbour or your condo building.
Myth 6: if I make a claim, I’ll receive the full value of my policy.
Whether it’s condo insurance or home insurance, you don’t always get the coverage limit payout for your claim. You receive an amount that will cover your loss. For example, if your dishwasher malfunctions, overflows and damages your hardwood floors and your content coverage is $30,000, but the repair to your hardwood floors costs $4,000, you would receive $4,000, not the full $30,000 in coverage.
By understanding how your condo insurance works and how it’s different from your condo building insurance, you are better equipped to make important decisions about your condo. Visit the Financial Services Commission of Ontario’s Understanding Home Insurance webpage for more information about condo insurance.
You May Also Be Interested In: Everything You Wanted to Know About Condo Living
Disclaimer: All investing can potentially be risky. Investing or borrowing can lead into financial losses. All content on Bay Street Blog are solely for educational purposes. All other information are obtained from credible and authoritative references. Bay Street Blog is not responsible for any financial losses from the information provided. When investing or borrowing, always consult with an industry professional.