Condo Unit Insurance vs Building Insurance, Simple Explanation

Many owners believe one sentence, and it creates the biggest financial surprises in condominiums.

“The condo corporation has insurance, so I am covered.”

No.

The building insurance is for the corporation. It is designed to restore the building and the standard unit. Your unit owner policy is for you. It protects your belongings, your upgrades, and your personal liability.

If you own a condo and you do not have your own insurance, you are choosing to pay out of pocket when something goes wrong.

The one scenario that explains everything

Water leaks from the unit above you and damages your ceiling and your renovated flooring.

What many owners expect

The owner above pays for your nice flooring, or the corporation pays for it.

What often happens

The simple explanation is that the corporation restores what is included in the Standard Unit By-law. Anything beyond that standard is usually not covered by the corporation, nor by your neighbour's unit insurance, whose bathtub overflows.

This is the part that owners miss

In many condos, flooring and cabinets may not be included in the standard unit by law, or only basic versions are included. Upgrades like better flooring, custom cabinets, stone counters, built-in storage, and upgraded fixtures are often beyond the standard unit.

So even if the unit above caused the leak, neither the owner above nor the corporation will pay to restore your upgrades. Your own policy is what protects you from that gap.

What you can lose without your own policy

Your belongings

A leak does not just damage drywall. It damages rugs, sofas, electronics, clothes, and artwork. The corporation does not replace your personal property.

Your upgrades

If you invested in nicer floors or cabinets, that money is at risk. The corporation restores only the standard unit. The difference between standard and upgraded is on you unless you insured it.

Large deductibles

Condo claims have deductibles. Water damage deductibles can be $50,000.00. If a leak starts from your unit, the corporation may charge the deductible back to you, depending on the documents and the situation. Without coverage, it is a direct bill.

Personal liability and legal costs

If water from your unit damages other units, you can be responsible. Even if you disagree, legal defence costs money. Your policy usually includes liability coverage and legal defence.

Two questions every owner should ask their broker this week

1. Do I have enough improvements and betterments coverage to rebuild my upgrades, flooring, cabinets, counters, finishes

2. Do I have coverage for condo deductible chargebacks, especially water damage deductibles

Bottom line

Condo living is shared risk. Water moves fast, costs move faster.

The corporation will restore the standard unit. Your insurance protects everything beyond the standard, including your belongings, your upgrades, and your liability.

If you have not reviewed your policy in the last 12 months, do it now.