Questions To Ask Before You Buy Condo Insurance
You finally get the perfect condo. And it ticks all the amenities you have been on the search for. However, one mind-boggling task remains untouched: condo insurance. One of the biggest mistakes that most condo owners, especially new owners make is assuming that the building’s insurance will provide coverage for their condo. Unfortunately, most new buyers, if not all, who ignore the need for insurance end up getting unpleasant surprises when issues occur. In most cases, condo insurance provisions state that all bathroom, floors, kitchen and walls renovations are the responsibility of the condo owner. Before you sign that insurance policy, here are some questions to ask.
1. What does my condo insurance provide coverage for?
You do not want to get stuck with condo insurance that provides unclear provisions on what is covered and what is not. Your condo insurance should provide coverage for:
- The contents in your condo- All contents inside the condo including but not limited to electronics, furniture and clothing are protected against perils such as theft, fire, explosions and water damage caused by overflows and bursting pipes, up to the insured amount. Contents such as fur and jewelery will often have specific limits of coverage that can be increased for an additional premium. Also, be keen on other exclusions such as computers, cameras and recording equipment, especially for people who work from home.
- Personal liability- Personal liability provides coverage for bodily injury to other parties such as visitors and neighbours. For instance, your visitor may trip over a rug and sustain injuries. Your bathtub may overflow and cause water damage to the apartment below, inflicting damage worth tens of thousands. This insurance will provide coverage for such unpleasant occurrences.
- Walls and floors- The condo owner is responsible for insuring their specific condo unit, including fixtures, floors, walls, ceilings and appliances.
2. Does my lender or building have special insurance requirements?
If a lender is financing the purchase of your condo, you might want to check with them for any special requirements. This is the same case for the building. For instance, some condo lenders may require you to insure prior renovations from previous owners up to a certain percent of the loan value. Similarly, some buildings will require you to have enough coverage to cater for water damage incidents where you are at fault.
3. How much will my condo insurance cost? And what is my budget?
The cost of condo insurance differs based on certain factors such as the insured risks, your location and the government’s provisions. You do not want to purchase condo insurance that is straining your bank account. Similarly, purchasing condo insurance that does not provide sufficient coverage will cost you more in the long run. While it is always advisable to go for affordable condo insurance, the rule is to never under-insure. A tip to this is to shop around and compare rates among different insurance providers.
4. Will my insurance provide coverage if I sublet my condo?
Many condo owners sublet their homes. But with platforms like Airbnb, some people end up commercializing their condos, ignoring the provisions of the insurance. If you are planning to rent out your apartment for, say, six months, you can always modify your coverage. This ensures that your condo insurance is not rendered ineffective. Your insurance will not be cancelled if you live in the condo part-time, provided you do not rent it out. However, the condo should still be occupied and not vacant.
Point to note: Always inform your insurer or agent in case you decide to sublet or lease your condo.
5. Does my condo insurance provide coverage for pets?
Most insurers provide coverage for pets if notified beforehand. However, there are limitations on the type and breeds of pets that will be insured. While most insurers provide coverage for dogs, there are limitations based on the type of breeds. Pit bulls, for instance, may be difficult to insure given the perceived higher risk of bites. Also, most insurance providers have limitations on the type of pets that can be insured.
6. What is my deductible amount?
While the deductible amount can help you remit lower premiums, it can challenge your finances especially when it is set at higher amounts. Most insurers will advise on raising the deductible amount to reduce the premiums. However, if you are at high risk to insure, it is not advisable to raise the deductible amount.
7. Will my claims history affect the cost of my condo insurance?
Yes. Your claims history will ultimately affect the cost of your condo insurance. A history of many claims may show that you are a high risk to insure. Some insurers may even refuse to provide insurance forcing you to pay hefty condo insurance costs. How can you prevent this from occurring? Make fewer claims. If, say, an insured peril occurs that is less than the deductible amount, paying for the renovations out of pocket is wiser than informing your insurer since no compensation will be offered anyway. You do not want to be blacklisted as a high-risk insurance individual.
8. Will my insurance cater for temporary housing if my condo becomes inhabitable?
Your condo can become inhabitable due to issues such as smoke, fire, gas line explosions or water damage. Most insurance policies provide coverage for loss of use. However, some policies have limits to the time limit and the amount of coverage. It is always wise to get this info prior to purchasing your condo insurance. To qualify for loss of use coverage, the loss has to be an insured peril. That means your condo policy has to cover the reason for the damage (fire, for example) for it to provide you with loss of use coverage.
9. What is excluded from my condo insurance?
All insurance policies have exclusions. If not keenly examined, you may find yourself paying out of pocket for perils that you thought were insured. Among the most common condo insurance exclusions include damage from vermin and insects, dog bites from some breeds, damage of property due to rising water levels and short-term renters.
10. What measures can I undertake to reduce the cost of my condo insurance?
You can reduce the cost of your condo insurance without increasing your deductible. Minimizing the probability of accidents from occurring is a clever way to reduce the cost of insurance. For instance, installing a fire alarm system and security system ultimately reduces the chances of fire-related accidents and theft. Note: This has to be a centrally monitored alarm with a valid certificate to qualify for the discount in Ontario.
These questions may seem complicated especially for a first-time homebuyer. To ensure you get your condo insurance needs right, always work with a reputable insurance provider or agent.