When it comes to protecting your condominium unit, insurance is a crucial aspect that cannot be overlooked. But choosing condo insurance is not always straightforward. What type of insurance do you need if you dwell in your condo? What coverage is necessary if your condo is an investment property with tenants present? What, if any, insurance does the Condo Corporation provide – and is it sufficient?
Below, we break down what you need to know to make an informed decision about the type of insurance coverage that best suits your situation and investment goals.
Master Policy (Sometimes Called the Condo Policy)
Since condominiums have shared spaces and common areas, the condominium association typically holds a master insurance policy. This insurance is paid for with a portion of your condo fees. The master policy covers the building’s structure, common areas, and liability for the association.
However, when thinking about how to choose condo insurance, it’s critical to understand what the master policy does not cover. In Alberta, Condo Boards can charge back up to $75,000 of the condo board’s deductible to the unit owner if an insurance claim originates in their unit. This makes it imperative for every condo owner to carry their own individual condo insurance policy – one that protects them from these potential high chargebacks.
Before choosing a policy, ask your Condo Board about:
- The deductible amount on their policy
- Common elements in the building that could be exposed to damage
- Scenarios that might result in a loss assessment
This clarity will help you better understand how to choose condo insurance that properly complements the master policy.
Homeowner Policy
If you own and live in your condo, a homeowner’s insurance policy is likely the right choice. It generally includes:
- Coverage for the interior of the unit (walls, floors, upgrades, etc.)
- Personal property protection (furniture, electronics, appliances)
- Liability coverage for accidents inside your unit
- Additional living expenses if you’re displaced due to a covered claim
This is a solid option when considering how to choose condo insurance for owner-occupied units. Ensure that your policy also addresses the potential $75,000 chargeback from the Condo Board’s deductible.
Landlord Policy
If your condo is used as a rental property, you’ll want landlord insurance instead of a standard homeowner policy. This type of coverage includes:
- Interior structure and upgrades
- Liability coverage for tenant-related incidents
- Loss of rental income if the unit becomes uninhabitable due to a covered event
Understanding how to choose condo insurance as a landlord means recognizing that standard policies may not protect you from tenant-related risks. If you’re renting your condo out on a short-term basis (such as through Airbnb), standard landlord insurance may not be enough. You may need commercial or business insurance to ensure proper coverage.
Renter’s Insurance
While renters’ insurance isn’t your responsibility as a condo owner, it’s wise to require or recommend it to your tenants. It covers:
- The tenant’s personal belongings
- Liability protection
- Living expenses if the unit becomes temporarily uninhabitable
Encouraging renters’ insurance helps mitigate risk for both you and your tenant. It’s part of a well-rounded approach when looking at how to choose condo insurance for investment properties.
Choosing the Right Coverage
The process of figuring out how to choose condo insurance starts with understanding your role and how you use the property. Consider the following:
- Do you live in the condo yourself?
Choose a homeowner’s condo policy with personal property and liability protection.
- Do you rent it to long-term tenants?
A landlord policy is best, with coverage for structure, liability, and income loss.
- Are you offering short-term rentals?
You may need a business or commercial policy rather than traditional landlord coverage.
Remember: the insurance held by the Condo Corporation protects the building, not your individual unit. Without the right personal policy, you’re exposed to risks that could result in significant out-of-pocket expenses.
When deciding how to choose condo insurance, speaking with an insurance advisor is essential. They’ll help you identify coverage gaps, compare policy options, and ensure you’re fully protected based on your unique situation.
Need Help Managing Your Condo Investment?
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With over 30 years of experience, we offer two levels of service packages so you can get the support that fits your specific needs. From tenant screening to maintenance coordination, we take the stress out of property management.Contact us today to learn how we can help you manage and protect your rental property more effectively.