What Type of Insurance Do You Need for your Condo?

Toronto Condo Living, Toronto Real Estate News

With these incredibly low insurance rates available, it has never been a better time to own a condo in Toronto. Condo insurance is generally more affordable than home insurance with average condo insurance policy rates in Canada falling within the range of $20 to $35 per month.

In Toronto specifically, the average monthly cost of condo insurance is $26, compared to $65 for homeowners. However, condo insurance rates vary drastically depending on a variety of factors, including the location, the policy, and the value of the building. Additionally, with so many coverage plans being offered, it can be a challenge to narrow down the best option for you.

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Learn the details of your homeowners association master insurance policy

Everyone who purchases a condo becomes a member of a homeowners association (HOA). Together, each homeowner shares the responsibility of setting rules and regulations, managing the upkeep of the building, and collectively paying HOA insurance to protect against a variety of issues. HOA insurance covers a wide range of general risks that are common to shared-space living. Some HOA plans even cover renovation costs, so you could potentially save a lot of money on improvements to your condo down the line.

However, not all HOA policies are created equal. Many master policies cover the full spectrum, but others limit insurance to incidents involving the entire building, such as a hailstorm that leaves the roof dented, and common areas shared by all homeowners. If you frequently invite guests over, make sure that your insurance covers injuries of guests in common areas, such as the indoor pool, and find out if they cover injuries that occur in your unit.

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Your homeowners association might not have an "all-in coverage" policy, meaning that each individual is responsible for insuring their own property and valuables. If your homeowners association does not offer all-in coverage, it is advisable to purchase individual coverage as well, so you can be sure you are protected against individual property damage, loss, or theft.

Most condo owners pay at least a small amount for additional insurance. But before you rush to purchase personal property insurance, read the fine print of your HOA policy to ensure you know what is and is not covered. Haven’t bought your condo yet? If you’re still choosing a building, don’t be afraid to request HOA proposals from each of them to compare and contrast.

Learn the benefits of all-risk insurance

All-risk insurance protects your building and contents against a wide range of risks. Ask your insurer what their specific policy includes. Some do not protect against intentional damage, while others do. In short, all-risk coverage is property insurance covering damage or loss arising from any cause, with the exception of those that are excluded in the fine print.

This is a beneficial form of insurance for many condo owners due to the immense flexibility the coverage offers. In addition, it's not very likely that you will be swindled by your insurance company since all-risk coverage covers literally everything except that which has been specifically omitted. For instance, if your coverage doesn't mention fire damage, then you can be sure that fire damage is covered.

For people who like to feel secure in the knowledge that their insurer has their back or individuals who have previously had to pay out-of-pocket due to misleading fine print, this is probably the most risk-free insurance plan available. It is the most comprehensive plan on the market, and understandably, it can run fairly high in cost. In the event of a disaster, this could be a great investment nonetheless. 

Photo by Piotr Chrobot 

Insure your personal property

When most people think of personal property insurance, they think of the obvious scenario: someone breaks into your condo, emptying your drawers of all your valuable gold jewelry or running away with your slick new iPhone 7 that you use to keep up with business emails. As far as insurance companies are concerned, it’s slightly more complicated than that.

You can insure any amount of personal property, and many homeowners make a yearly inventory of their most important belongings in order to make sure their insurance policy is providing them with the best coverage. If you have recently purchased a brand new flat-screen TV or inherited a closet full of your great-grandmother’s clothing, add them to the inventory at the end of the year.

Many people are unaware of how flexible personal property insurance actually is. Do you have an adult child who is away at university or an elderly relative in a care facility? Home insurance policies will typically provide coverage of personal possessions belonging to family members who are studying away from home, staying in a healthcare facility, or even travelling. Even if you or your family member is not at home at the time of the damage or theft, you’ll still be covered.

This is known as the "personal property guarantee," and can be found in the fine print of insurance policies. While home insurance policies include replacement value clauses, guaranteeing that your damaged items will be replaced by brand new and equally comparable ones, be aware that policies enforce limitations.

Be aware of additional costs and living expenses

It makes sense that you might have to pay a little bit more for condo insurance depending on your assets, but you might be surprised to learn what insurers won't cover. For instance, you might be expected to pay more depending on what kinds of appliances you have and what year they were made.

Of course, the more valuable assets you have (including electronics, clothing, jewelry, appliances, and other household items), the more you will be expected to pay. Most condo insurance policies permit you to start in the $20,000 range with no limit.


Another factor to be aware of is additional living expenses. In the event of major damage to your unit that renders it unlivable, and you are forced to live elsewhere for a period of time while it is undergoing repairs, you could suffer tremendous financial loss. If you don't have family or friends to stay with during this hypothetical situation, you would inevitably end up living in a hotel or other temporary accommodation costing you upwards of several thousand dollars.

Fortunately, most personal condo policies include protection in the case of a major emergency, including the cost of your temporary living situation. $10,000 is typically the limit of coverage, but for most people, this is more than enough to keep a roof over their heads during the time it takes to rebuild or repair.

Be informed about third-party liability insurance

Very few insurance companies will include liability insurance in their comprehensive coverage plans. As a responsible condo owner, you are expected to uphold your end of the deal by maintaining your living space appropriately and protecting yourself against damage.

It's recommended that you check to make sure you have turned off all faucets, checked the stove, and locked your doors before you leave your condo every single time. Even forgetting to turn off the kitchen tap once could lead to flooding and water damage in a unit below you, and your neighbours would be well within their rights to sue.

Another situation would be if a guest suffered an injury in your unit due to your negligence. For example, if you left a sharp object on the edge of the counter and a visitor hurt themselves, they could potentially take you to court.

That said, everyone makes mistakes. If you ever cause unintentional damage to someone's body or property due to negligence, condo insurance companies will cover you at a starting rate of approximately $500,000. Liability insurance comes with some of the steepest price tags, and it is not unheard of for condo owners to pay up to $3,000,000. 

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Know how you'll be covered in the event of a natural disaster

Water damage is the number one reason for insurance claims in Canada, and most all-risk insurance plans don't cover it. Unlike other provinces, many insurance companies in Ontario offer "overland flood insurance" or disaster insurance and for good reason. It is not uncommon for summer storms coming in off the Atlantic Ocean and rising levels of nearby lakes to cause devastation in Toronto, although the Eastern Seaboard is usually hit harder.

Unfortunately, many condo owners have found out too late that their insurance coverage does not protect them in the event of major flooding. In 2016, the Insurance Bureau of Canada revealed that the total cost of insurable disaster damage was a staggering $4.9 billion.

If you opt for an all-risk insurance plan, make sure you read the fine print carefully. It is highly unlikely that these types of plans will cover you in the event of an earthquake, tornado, fire, flood, or even sewer backup. Coverage for these types of events will need to be purchased independently at an additional cost to you.

In order to ensure everyone in your family is prepared in the case of a serious natural disaster, teach any young children in your care the best strategies for escape. Know your unit inside and out. Prepare a 72-hour emergency preparedness kit.

It is crucial to be insured in the case of a natural disaster, as damage can cost you thousands of dollars. For your peace of mind, make it a priority to learn about disaster insurance coverage plans. Typical rates for overland flood insurance and disaster coverage in Ontario range from $1,000 to $50,000. 


Learn the differences between replacement cost valuation (RCV) and actual cash value (ACV).

You might be familiar with this terminology, but understanding the subtle differences between the two options can be confusing for even the wisest condo insurance shopper. Replacement cost valuation tends to be the most popular amongst homeowners and condo owners alike, but make sure you’re aware of the pros and cons of both, as they can affect your premium differently.

RCV is the most highly-recommended option since it allows homeowners the most protection before a crisis occurs. But what does RCV actually mean? In short, the definition of the replacement cost value is the total value of your home and belongings, not including the land.

This is beneficial for one obvious reason: the cost of the lot is irrelevant, and you do not have to insure it. Imagine a condo owner who purchased a brand new unit for $450,000, on a lot priced at $50,000. Assuming there is no market appreciation, the insurance cost of the unit would be a significantly smaller number: only $40,000.

The cost is generally calculated using the initial market value of the items or the cost of the labour involved in building the condo. It does not take depreciation into account. If you are interested in knowing upfront how much your assets are worth, hire an appraiser to evaluate a rough estimate of the RCV.

In the event of damage or loss, you can usually expect to pay the replacement cost in two installments. Your insurer will pay either half or all of the replacement cost, allowing you to make the necessary repairs or replacements. At that point, you would be expected to send documentation to your insurer.

You can see why RCV is an appealing option to many condo owners, but what is ACV, and what are some compelling reasons people might choose to purchase this type of insurance instead?

For one, every insurance policy based on ACV is much less costly. This is due to the fact that ACV coverage plans take depreciation into consideration. For every year that you own a valuable asset, you can expect it to depreciate. Insurance coverage for your personal belongings will only cover the depreciated value. For instance, recording software worth $10,000 four years ago may be worth $5,000 this year. ACV insurance will cover the current value of the software. If this is not a deal breaker for you, or you do not own a lot of valuables, ACV is an inexpensive alternative to RCV.


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