How Does Condo Dwelling Coverage Work?

After years of savings and countless hours of research, you’ve finally decided that you want to purchase your very own condo unit. Buying a new condo unit is incredibly exciting, but it can also be a little bit stressful, especially when the time comes to purchase an insurance policy.

Most mortgage lenders in Canada require lendees to purchase condo insurance for their units, so chances are, you’ll need to invest in coverage. Because of this, you should take a moment to learn the ins and outs of condo dwelling coverage and how it works.

Taking the time to learn the basics of condo dwelling insurance will help you make an informed decision when you purchase a policy.

Continue reading to get started!

What is dwelling coverage for a condo unit in Canada?

Taking the time to learn the basics of condo insurance (before you start searching for a unit) is incredibly beneficial, especially for new, inexperienced buyers.

Simply put, condo dwelling coverage is a type of insurance that financially protects your dwelling (i.e. the unit that you own and live in), the walls, floors, ceiling, cabinets, fixtures, etc., and the contents of said dwelling (i.e. your personal belongings).

If a covered, unexpected event damages your individual condo unit or the contents of your unit, your condo insurance can cover all (or a portion) of the repair and replacement costs (depending on your coverage limits).

Condo dwelling coverage also covers personal liability, which means that it can cover your legal fees if you get sued for an injury that you cause to another person or their property, whether it happens in your unit or not.

Your personal condo insurance policy goes hand-in-hand with your condo association’s master policy (more on this shortly).

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Your condo insurance will also feature additional coverages like condominium deductible coverage, additional living expenses, loss assessment coverage, improvements and betterments and condominium contingency coverage.

What does condo unit dwelling insurance cover in Canada?

Policyholders can use their condo insurance to cover a wide range of losses and damages that occur due to an unexpected event. Each condo insurance policy is different, but in most cases, a standard policy can financially protect you from unforeseeable events like fire damage, burglaries and theft.

Getting high-quality condo insurance gives you much-needed peace of mind; if an unexpected event, like a fire, damages your individual unit or personal belongings, you know that you can rely on your condo insurance.

What’s the difference between dwelling coverage and a master policy for a condo?

A master policy is a unique type of condo insurance policy that is intended for condo associations, not individual condo unit owners.

Unlike your condo insurance dwelling coverage (which financially protects your individual unit), a master policy covers several aspects of the property, including:

  • The building
  • Elevators
  • Communal areas like lounges, spas, etc.
  • Mechanical features

Master policies also feature liability coverage which covers injuries and personal property damage that occur in the building (not your individual unit). 

So, if something happens while you’re in a common area in your condo building, your condo association’s master policy can cover the legal expenses. However, your condo association’s master policy may not be able to cover everything; this is when your contingency coverage comes into play. Speak with your Surex insurance advisor to learn more.

Home insurance dwelling coverage vs condo dwelling insurance coverage in Canada — What’s the difference?

Dwelling insurance for a condo is similar, yet quite different, from dwelling insurance for a detached home.

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In regards to home insurance, dwelling coverage is a type of property coverage that can financially protect the primary structure (i.e. the home), attached structures (i.e. carports and garages) and permanent structures/attached equipment (i.e. in-ground swimming pools).

Policyholders need to complete a home evaluation in order to determine the dwelling value (this is often different from the market value of the property).

Furthermore, even though condo insurance is relatively inexpensive compared to a detached home policy, the risks of condo-ownership are significantly higher and require this specialized insurance. What are the risks? Here’s some scenarios:

  • Significant damages to a common area and the condo corp’s policy is insufficient to cover the repair costs. All unit owners will be required to pay a portion of those repairs
  • There are damages to a common area that fall below the condo corps policy deductible. All unit owners would be called upon to pay their portion of the repairs. (Some condo master policies hold a $250,000 – $500,000 deductible! So if there was a $240,000 loss, the policy wouldn’t respond.)
  • There is a large loss in a common area and the condo corp neglected to renew their policy. Again, all condo owners would be responsible to pay for repairs.
  • Despite the slight monthly cost of a condo insurance policy, there is no price tag to place on the importance of having one.

How can you save on condo insurance in Canada?

Condo insurance is relatively inexpensive, especially when compared to other types of insurance, like home or auto. That being said, it’s still a regular expense that needs to be covered.

The cost of condo insurance differs from location to location, but policyholders can expect to pay anywhere from $30 to $50 a month for coverage. 

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If this seems a little steep, there’s no need to worry! There are a handful of things that you can do if you want to get cheap condo insurance in your area. Some of our top tips include:

Increase your condo insurance deductible

As a rule of thumb, the higher your condo insurance deductible is, the lower your premium will be. Generally, policyholders with higher deductibles are less likely to submit insurance claims. Insurance companies want to work with policyholders that are less inclined to submit claims, so they usually offer discounts to incentivize policyholders to increase their deductibles.

Purchase a new condo

Newer condo units tend to be safer than older condo units, which means that they’re usually less of a risk for insurance companies to insure.

Bundle your insurance policies

If possible, we highly suggest bundling multiple insurance policies (like condo and auto) with the same insurance provider. Bundling your policies makes it easier for you to make payments and can potentially lead to significant savings (sometimes as high as 25%).

Team up with an online insurance brokerage

Contacting an online insurance brokerage is the best thing that you can do if you want to get the most bang for your buck while shopping for insurance. Insurance brokerages work with a variety of insurance providers, which allows them to provide policyholders with several quotes at once. If you have questions about your condo insurance quotes or current policy, your insurance broker can help you find the solution.

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