OWN01 - Insurance: Get it Now!
I’ll start this off by trying to make this as clear as
possible – YES – CONDO OWNERS NEED TO BUY THEIR OWN INSURANCE. If you don’t have it, GO GET IT NOW!
I hate to type in caps and get yelling and all but it’s a serious point. 61% of condo owners incorrectly think that the Condo Corporation’s Insurance will protect them from everything. Bzzzzt! Wrong answer. While the Condo Corporation’s insurance will cover items of common property, such as the structure, parkade and elevators – it doesn’t cover belongings in your unit, like that expensive new pair of jeans or your LED TV. It also doesn’t cover new improvements you made recently to the unit, like those new hardwood floors you put in last year. You have to get your own “owners” insurance that will cover you for a variety of things. But forget all that – your “stuff” isn’t the real reason to get insurance. The whole concept of liability is. If your dishwasher were to start leaking while you are off on vacation or at work, and the water subsequently runs 8 floors down, causing water damage – you are potentially on the hook to pay for the repairs. Same thing if a fire starts in your own unit that damages other units. With more and more condo corporations losing their water coverage in their insurance policies – when leaks occur – someone’s got to pay the repair bills. That someone is the owner of the unit where the problem originated! Owners could face bills in the hundreds of thousands of dollars (or more). So while you might think losing your new $2,000 LED TV is bad…. If you don’t have liability insurance you could be looking at a lot worse. Hundreds of thousands worse. Try and get a policy that covers items in a storage locker – you’d be surprised at how much you have in there. Theft from your car may be covered under your property policy too – confirm with your insurance broker. Damage to your car itself will should be covered under your auto policy. You may also see a comment about special assessment coverage – sorry – this does not cover you in the event your Condo Board is forced to levy a special assessment for that aging elevator. What is does cover is if an incident occurs that forces the Condo Corporation to make a claim against its own insurance (ie a fire of unknown origin). If the Condo Corporation’s insurance is insufficient to cover all of the loss or it can’t pay the deductible – it may have to special assess. In this rare situation – yes – your personal insurance may actually respond to a special assessment. The key differentiating factor here is that a valid insurance claim was accepted by the insurer – it’s just that coverage wasn’t enough, or the Board can’t afford the deductible. This last point is increasingly relevant – to save on premiums, Boards are having to accept higher deductibles, and very few have cash on hand to pay deductibles of this size. What’s a deductible you ask? When you make a claim, a small portion of the claim is always paid by you first, then your insurance company pays the rest. The portion you pay is called your deductible. The amount of your deductible affects the price of your insurance policy. The higher your deductible, the less the cost of your insurance premium. So – have I convinced you yet to go get “Owners Insurance” yet? Here’s the beauty – the policies are pretty cheap. A quick online quote on a major bank’s website shows that $30,000 of content coverage would be about as much as a pair of nice Nike shoes. Amounts may vary given the characteristics of your building. Typically you may get a bit of a discount if you combine it with your auto policy or any other coverage you might have. One tip – you may be able to bring your annual premiums down slightly if you reduce your deductible. ~CondoSensei |
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