Mackay Insurance Blog
Condo Insurance: What You Don't Know Could Cause Your Rates to Increase
Do you understand your condo insurance? Many condo owners remain in the dark about important policy information impacting their rates.
For example, did you know that your condo is actually covered by two different insurance policies?
The majority of condo owners do not realize this.
Do you understand why your insurance premiums keep going up, and up, and up?
Most owners don't understand this either.
Mackay Insurance can help! This article explains both mysteries so you will be better informed and better protected.
Condo Insurance Is Two Policies, Not One Policy
When you decide to purchase a condo, you are responsible for taking out a condo insurance policy.
That is one of two policies that covers your condo in case of loss or damage.
Your condo corporation (sometimes called syndicate) also takes out a condo insurance policy.
This is the second policy that covers your condo in case of loss or damage.
Condo Corporations Are Facing Premium Increases on Condo Insurance Too
Understanding what the condo corporation policy covers and excludes is critical to selecting the right type and amount of condo insurance for you.
Various factors can influence pricing for annual insurance premiums on syndicate and individual condo insurance policies.
As syndicate insurance premium prices increase, your syndicate may elect to drop or reduce certain coverages.
Alternatively, your syndicate may decide to offer incentives to condo owners who implement individual unit risk reduction strategies against constant cash drains such as water damage claims.
This becomes especially pertinent as condo structures continue to age at the same time severe weather increases province-wide.
Not only can aging alone cause syndicate condo-wide insurance premiums to increase, but as structures age and claims increase, premiums may increase yet again as a result.
And when you add in the increase in new condo construction and increasing demand for condo insurance as a result, you can see even another increase in insurance premiums.
As if that wasn't already enough, investors into the condo insurance may choose to divert funds towards less costly, lower risk investments, causing a scramble within the condo insurance marketplace for new sources of funding.
Syndicates, like individuals, have options to try to control annual premium costs, including raising their deductible, dropping certain coverage riders and limiting coverage for certain categories of claims.
It is important to take time each year to review what your condo corporation's insurance policy covers and to then review your own individual condo insurance policy in light of that.
If you need help comparing what each type of policy covers for your condo, your friendly Mackay Insurance broker is happy to help.
What to Look For When You Review Your Condo Insurance Coverage
The generic individual condo insurance policy typically consists of seven parts:
- Interior condo upgrades.
- Contents inside the condo.
- Liability (third party).
- Theft (condo).
- Locker (theft).
- Assessments rider.
- Additional living expenses.
Whether you opt to purchase all seven of these coverages, and how much coverage you elect for each, can and should be adjusted based on what the condo corporation's own policy covers.
In other words, why pay money every month for coverage that is also included in the condo corporation's coverage benefits?
You will also want to take some time to read the fine print explaining how the condo corporation handles deductible payments.
For instance, it is vital to find out if you may be responsible for reimbursing the condo corporation for your portion of the corporate deductible for certain categories of claims and losses.
Specific Features & Benefits of Condo Insurance Solutions:
- All risk coverage and replacement costs on contents are covered
- Debris removal for an additional 10% of the contents limit is covered
- Credit card coverage (up to $10,000 per occurrence)
- Coverage for electric vehicles
- Satellite dishes are included automatically, at no additional cost
- Food freezer installation ($3,000, no deductible applies)
- Premium discounts
- Lock replacement ($1,000 with no deductible)
Be Aware of These Big Changes In Corporate Condo Insurance Policies
Recent industry reports highlight a worrisome trend among condo corporations to downsize their own liability, shifting that responsibility over to individual condo owners.
Well-publicized recent changes include shifting responsibility for maintaining insurance coverage for damage to floors and countertops to individual condo owners.
Water damage claims are another hot button area where condo corporations are increasingly attempting to shift responsibility over to individual condo owners.
Structural claims such as water damage can become particularly problematic to resolve when the damage affects more than one condo in the building.
For example, if a wall pipe bursts and causes damage to both your condo unit and a neighbour's unit, the claims filing and payout process can quickly get complicated.
Condo insurance as a product is designed to minimize such headaches. But it can only do its job well to serve your interests when the coverages you select effectively plug up any coverage holes in your condo corporation's own policy.
Three Condo Insurance Riders You May Regret Not Having
These three condo insurance riders are all too commonly overlooked, either because the owner does not think they are needed or because the owner mistakenly believes the condo corporation is providing coverage.
According to a recent insurance industry survey, a full one-third of condo owners do not carry any insurance coverage for water damage.
Water damage is the number one condo insurance claim.
If you are keeping high-value possessions such as instruments, collectibles or jewelry in your unit or locker, be aware that your standard condo insurance may not cover these items.
If you have roommates or tenants (whether long-term or short-term renters), you need to make sure they carry their own separate tenant insurance policy.
This is especially the case if you plan to participate in home-sharing (i.e. Airbnb), which could void your coverage entirely if not disclosed.
Give your friendly Mackay insurance broker a call to review your current condo insurance coverage against coverage provided through your condo corporation and make sure your policy fully protects you.
Optional Condo Coverage Add-Ons:
- Claim Free Discount Protector (protects the claim fee discount following the first claim)
- Personal Umbrella Coverage (as high as $9,000,000)
- Enhanced Special Limits (doubles the special limits noted in the policy)
Mackay Is Your Napanee and Belleville, Ontario, Condo Insurance Broker
Worried about your skyrocketing condo insurance rates? We may be able to help! Reach out to schedule a virtual appointment by phone, email, Zoom, Skype or chat.
Here are some Points For Protection to help keep your condo investment safe:
- Place all valuable jewelry and other expensive items in a safe location (ie. not in the master bedroom)
- Review and practice your basic fire safety plan (with all family members)
- Always keep an up-to-date inventory on all large purchases (ie. televisions, furniture)
- Always always always turn off the water before you leave for vacation!