There are many myths about all types of insurance, including condo insurance. Even though this insurance is less complex than many life or car insurance policies, numerous misconceptions exist – but we will straighten those out today!
Myth 1: The condo corporation has insurance, so you don’t need to get your own, separate condo insurance
The truth is, the condo corporation’s insurance only covers the building envelope (cladding, roof, etc.) and common areas (gym, hallways, foyer, etc.). Your personal belongings, third party liability, living expenses if you have to relocate due a disaster (flood, fire) that damages the condo, and coverage for your storage locker are not included in the corporation’s policy. You need your own condo insurance for full protection.
Myth 2: Condo insurance is mandatory.
Actually, it is not mandatory at the government level, but that doesn’t mean you can skip getting it. If you have a mortgage on your condo, your lending institution will often require you to have home insurance. If you are renting the condo, the landlord may require you to obtain rental insurance. In any case, having your own condo insurance is the right move, and it provides peace of mind.
Myth 3: Upgrades, like granite countertops, are automatically covered by condo insurance.
Renovating your condo? Your upgrades are not covered. You must report upgrades to your insurer. They will adjust your premiums to cover upgrades under your policy.
Myth 4: A burst pipe in the wall that floods several units, including your own, is the responsibility of the condo corporation.
Remember, the condo corporation’s insurance only covers the common areas and building envelope. Your personal condo insurer must work with the corporation’s insurer to sort out who will cover what (e.g. content damages might be covered under your personal insurance policy and wall damages might be covered under the condo corporation insurance policy). If you don’t have your own insurance, your contents and damage to your unit will not be covered.
Myth 5: Coverage remains in force during vacations.
Read your policy carefully. Each one differs but all have a clause stating how often someone must check on your condo while you are away. If something happens in your absence and nobody is there to promptly report it, your claim may be null and void.
For example, let’s say you left the tap on. Water overflowed and damaged the unit below yours. Your friend checks your condo and sees the issue. However, if nobody caught it while you were on vacation, you and you alone would be responsible for the costs.
Myth 6: Renting out the condo on Airbnb or short-term to a relative is okay.
Most short-term rentals are not covered by your insurer – especially through Airbnb due to the risk of damage to the unit, or the risk of an unauthorized additional sublet. You have to check with your insurer if your policy covers short-term rentals.
Myth 7: Earthquake? No problem. That’s covered… right?
Some select insurers, automatically include earthquake coverage. In general, if you live in an earthquake-prone area like Vancouver, British Columbia, or Quebec, you need to purchase an additional earthquake rider on your policy.
Myth 8: If a covered item is damaged or destroyed, the insurer will replace it with a new one.
The insurer will replace an item (e.g. a TV, fridge, cloths, etc.) using the actual cash value or it’s replacement value. You must read and understand your policy to know which method your carrier uses. It does not automatically mean that you get a new item.
Myth 9: It is my landlord’s responsibly to have condo insurance. Therefore, as a renter, I don’t need to buy insurance.
Your landlord may have condo coverage, but it will not cover your liability and your personal content. If someone slips on your floor and that accident results in medical bills, or if you flood your neighbour’s unit, you are responsible for those costs. Additionally, as renter your landlord may require you to get tenant (renters) insurance.
Myth 10: My dog bit a guest – I have to cover the costs because my condo insurance will not.
If you properly and truthfully disclosed your pets on your condo insurance application, that dog bite will be covered under your condo insurance liability. You may want to invest in some obedience training, though, as an aggressive dog can cause significant damage to your guests and your reputation!
Myth 11: It’s a good idea to maximize my condo insurance by making as many claims as possible.
Renewal rates are based on claim experience. If you have a lot of claims, your renewal rate will be higher. You may also have a deductible. Your coverage only kicks in once you pay the deductible. If you have a minor loss (that is less than the deductible) you’ll be the one paying for it while also having a claim on your record. Insurance is there for when you need it, but there are penalties like those described above for exploiting it.