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What to Ask About Your Condo Insurance?


Here’s a fact that most people already know: A condominium is poles apart from a house. Alleviated of a basement or a backyard, you don’t have to shoulder the responsibility ofshoveling a front walk or cutting the grass. Even though condos and homes differ in myriad ways, one aspect we are going to focus on is insurance. 


Condo owners are entailed to insure only a portion of their property on their own. However, one-rule-doesn’t-fit-all for multiple complexes, and it is important that you ask all the right questions from your Toronto condo team at the beginning to make sure that you have proper insurance coverage.Here are a few pointers to ask when it comes to insuring your condominium.

What Does Your Master Policy Say?

Condo owners typically don’t own the entire condominium complex. Even though they share ownership of the complex with all the other occupants, they only own their own unit outright. This translates to the fact that the responsibility of insuring areas of the complex owned in common, such as maintaining the pool area or building hallways or exteriors, falls on all the individual unit owners. 

All unit owners are required to pay up a monthly fee to the condominium association, which goes towards insuring all communal areas. However, when it comes to insuring all the paraphernalia that lies inside the four walls of an individual unit, only the unit owner is solely responsible. The condominium association’s rules as well as the master policy should clearly enlist which parts of the complex are covered by insurance through association dues, and which are not.

Two Common Types of Master Policies:

·         Bare Walls-in: This type of insurance policy covers all areas of the property from the exterior framing inward but excludes the installations and fixtures within the four walls of the unit. So, things like flooring, kitchen and bathroom fixtures, and granite countertops are not included in the master policy. In this case, the condo owner will need a higher coverage.

·         This type of policy covers additions, installations, and fixtures within the interior surfaces of ceilings, floors, and perimeter walls. In such a case, this condo owner will need less coverage.

How Much Coverage Is Appropriate?

Once you are clear on your master policy and which parts of your unit you need to insure individually, the next step is to determine how much coverage to acquire. We suggest that you ask around and observe how much other owners in the development are paying for upgrades such as new countertops, cabinetry, and flooring, when it comes to estimating coverage. A ballpark estimate can be achieved by calculating how much would be needed to replace your walls, cabinetry, flooring, or anything else that is deemed your personal responsibility, in events of a fire or any other calamity.

Replacement-Cost orCash-Value Coverage?

You should determine how much coverage to purchase once you are clear on the appropriate amount of coverage. You have to decide between two choices: Replacement cost or cash value. Here’s the shocking part: in many cases, the difference between the two could mean thousands of dollars, so choose wisely.

Cash-value coverage only serves to replace the value of the insured item after depreciation. The depreciation in the case of an actual cost-value coverage depends on how old the item is. For instance, if your refrigerator is 4 years old, the insurance company would see what it costs today and work out the depreciation accordingly. In this case, the owner would receive a check for the amount the appliance was worth after the said period of wear and tear.

On the other hand, replacement-cost coverage would offer the owner a check for what it would cost to get a new model of the item. Depreciation doesn’t factor in this model. In a condominium association, a replacement-cost coverage would be a more prudent choice for your contents. So, in events of a disaster, you would be compensated for what it would cost you to buy the lost items today.

How expensive is the association deductible?

When it comes to communal areas and commonly shared building assets, commercial insurance coverage is typically included in Condo association insurance. However, such policies normally include an association deductible. If there is a major damage to the structure or your condo association needs major work in the event of a hurricane, fire, or any other natural disaster, the condo association will be able to tender the claim to their commercial insurer and get coverage for their loss. 

However, when it comes to the association deductible, it is divided among all the unit owners equally. People who aren’t aware of this association deductible, would be hit by a bill that they didn’t even know about, from something as small as $5,000 or as large as $50,000. So, its important to do your homework upfront to avoid any unexpected surprises. The coverage is usually spelled out in the association’s bylaws, so pay attention.

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