Here’s a fun real estate stat for condo buyers: one in eight Canadian households live in a condo. That’s right, the 2011 National Household Survey (NHS) showed that 1,615,485 households (12.1%) lived (either as owners or renters) in condominiums. Of these households, 1,153,580 were owners while 461,215 were renters. Perhaps unsurprisingly, three-quarters of households in condominiums are concentrated in just ten census metropolitan areas (CMAs). The three largest CMAs in Canada—Toronto, Vancouver and Montréal—had the highest number of households in condominiums, accounting for more than half of Canadian households in condominiums. *
Condos continue to be a popular choice for buyers, particularly in metropolitan areas. That’s why it’s worth knowing a few critical things about condos in Canada before potential buyers jump in with both feet.
Why are condos different than detached homes when it comes to homeowners insurance?
Condos are regulated under provincial or territorial legislation and specific legal details vary from jurisdiction to jurisdiction. Condo owners usually own the internal unit space and a share of the corporation; the corporation owns the exterior of the building land and common area; in the case of a freehold condo unit the owner owns the land and building, and the corporation owns common shared roadways and amenities. You don’t own the building, you own a piece of it. That means each unit owner needs to cover their personal property and assets, as well as help the building stay properly insured.
What are condo fees?
The condo fee is an amount of money that must be paid monthly by owners of certain types of condo properties. The condo corporation that manages your condo collects these fees to assist with maintaining and improving properties in the association. Condo insurance can be more complicated than regular home insurance because of the different types of condo corporation policies and regulations.
You must decide how much coverage is necessary to protect your belongings and interior features, such as wood floors, kitchen cabinets and fixtures. Take stock of the interior items in your condo unit, including furniture, clothing and electronics. Tip: Don’t forget to record any expensive artwork!
One good estimation is to assume $40,000 in personal property for the first 1,000 square feet of your condo and then add $5,000 for each additional 500 square feet.
Then figure out what level of liability insurance you need. If your assets are more than $500,000, you may want to look into an umbrella policy. Don’t skimp on liability insurance – it’s an investment in the full protection of your property.
Why do I also need homeowners insurance for liability?
Liability insurance is typically part of the usual condo insurance policy. It protects you in case someone is injured in your condo unit, for example, if a friend or family member trips on your area rug and is injured. This could lead to incredibly costly medical expenses, or even lawsuits. That’s when liability insurance covers your assets. Make sure you select liability limits that are enough to protect your assets. Liability insurance often ranges from $100,000 to $500,000 as a minimum coverage limit. You may want to explore a personal liability umbrella policy if the liability limits are not high enough. The liability portion of condo insurance is usually the least expensive portion, so it won’t break the bank to get ample coverage.
Loss assessment coverage is also very important. Loss assessment coverage is protection condo owners can use on claims involving the building or its common areas. In most condo communities, your condo corporation has its own insurance that covers incidents outside of your personal unit. However, these claims sometimes exceed the condo corporation’s master policy limits.
As for additional coverage and who is responsible for purchasing it, it is generally speaking, you. Personal condo insurance is customized to fill in the gaps where your condo corporation’s insurance policy doesn’t protect you, so you’ll need to determine which type of policy your condo corporation has purchased.
There are typically two types of insurance your condo corporation could provide:
- This policy covers the fixtures in your condo such as the appliances, wiring, plumbing, and carpets, but does not cover personal property that you own.
- This policy does not cover anything contained within your bare walls. It may or may not cover your condo’s plumbing and electrical systems.
Be sure to carefully review your condo corporation’s policy to determine where you’ll need to fill in the gaps to cover your personal assets.
Your realtor can help.
There are more than 40,000 realtors in Toronto alone, so choosing the right one isn’t always an easy decision. The best thing you can do is meet with and choose a realtor that you feel you can trust and that you are confident with. If you meet with someone that doesn’t feel like the right fit, move on. When you have found someone that you can work with you may be asked to sign a Buyer Representation Agreement. This ensures that your realtor is working for you and in your best interests for an agreed upon amount of time.