A lot of condo owners have a misconception of what condo insurance is, and the type of personal coverage they need.
Before I elaborate on this, I would like to do a brief clarification on semantics. Depending on where you live, the “condominium world” has different names. In British Columbia, where I live, it is called Strata. This is the term I will use.
When you buy a condo, you become a member of the strata corporation. You own a share of the building and are entitled to vote on its affairs. One of your responsibilities as an owner is to pay monthly fees.
These fees usually cover for all repairs and maintenance, electricity, landscaping, caretaking and insurance. In British Columbia, insurance is mandatory for strata corporations. Owners are automatically named as insured.
However, the strata insurance does not provide coverage for anything and everything. The policy usually covers the original structure of the building and its original fixtures. It also covers for the replacement of the building at cost. If your building burns down, the insurance will pay for this. Note that if you have a mortgage, the money will be sent to your lender first.
The policy will also have a deductible. To keep costs low, most corporations choose a higher deductible. My strata’s is at $ 10 000. In order to trigger a claim, the total cost of repairs needs to exceed this amount. The corporation may also elect not to file a claim, particularly if an owner is responsible for the damage. Filing repeat claims has an impact on the price at renewal.
As an owner, you need to have coverage for both property damage and deductible assessments. You also need to include your personal belongings. The strata insurance will definitely not pay for them.
As mentioned above, the strata insurance only covers for original fixtures. If you change the floorings, the kitchen cabinets or the blinds, these are no longer covered. You need to include the value under improvements on your policy.
I would suggest you also include additional living expenses. If your condo sustains massive damage, it might become uninhabitable. The Province of British Columbia will only pay for relocation for 3 nights.
Obviously, your personal insurance could include many more items, but these are the basics. As a council member of my strata, I sometime encounter disgruntled owners who don’t understand why they have to file a claim with their own insurance company, or why they actually need personal coverage.
They are under the assumption that because they pay monthly fees and the building has insurance, they are not responsible for anything else. It is not the mandate of a strata corporation to pay for and be responsible for anything that happens in a building.