Are there any differences between condo insurance and homeowners insurance?
If I'm getting a condo, should I only be looking at condo insurance, or is it more or less the same as homeowner's insurance?
I get this kind of question a lot in practice because many insurance buyers are confused about this – and rightly so.
Homeowners insurance is pretty straightforward. Most people understand that it covers the value of their home, their personal contents, personal liability, and so on (for more details, see Breaking Down your Homeowner's Insurance Policy, from Coverage A to Coverage E). So, how is that different from condo insurance? They also might have heard of strata insurance and think "If the strata is buying insurance, why do I have to buy condo insurance as well? What does it even cover?"
A condo is a unit that is owned by separate owners who together form a strata corporation for the management of the overall building and the common areas. Those common areas include but are not limited to:
- Parking lot or parking garage
- Amenities provided in the building
So, this means that when the strata corporation buys insurance, they're only insuring the areas they are responsible for – the overall structure and the common areas. But that's it. Individual condo owners need to have insurance to protect everything else.
Generally, a condo owners insurance policy covers:
- Personal Property: the contents of your condo (including furniture)
- Additional Living Expenses: if your condo is damaged and uninhabitable, the insurance company will pay for additional living expenses you might incur by renting alternate accommodations
- Unit Improvements: the upgrades that you paid for (remember, the strata's insurance only covers the original value of the building, not any upgrades you make to it)
- Loss Assessment: if the strata's policy isn't enough to cover the loss to common elements
- Unit Additional Protection: covers the value of the unit itself when the strata's insurance isn't enough.
So, in summary, condo insurance differs from homeowners insurance by not insuring the value of the building. It provides less coverage than homeowners insurance, but only because those extra features of the homeowners policy are already taken care of by the strata insurance. If you're a condo owner, a homeowners policy would give you superfluous coverage that you don't need but still have to pay a premium for (see Condo Insurance 101 to learn more).