As a Condominium Unit Owner, there are a number of reasons why you need to purchase a Condominium Insurance Package.
WHY You Need It
Standard Type Condominium: The most common type of condominium is where you own a share of the Condominium Corporation and your share entitles you to use of the Unit/Suite. In these Condominiums, the Condominium Corporation is responsible for insuring the building(s) and all of the common elements (additional buildings, pool areas, etc).
The Condo Corp. will have insurance on the building, but they will only insure based on how the condominium was originally built. If there have been any Improvements or betterments made to the condominium whether by you or before your ownership of the condominium, you will still be required to insure these on your own.
In addition, the Condominium Corp policy will not cover your personal belongings. Even if you don’t own a lot of expensive things, it can add up to a lot of money to replace all your belongings.
Bare Land Condominiums are more common with either stand-alone homes or side by sides – but it could apply to any style of condominium – so it’s important to check to see from the Condo Corp. or the property manager what type of condo you own.
If you have a Bare Land Condominium Insurance policy then it will cover for the Building (similar to how a home insurance policy works)
Condominium Insurance packages provide coverage for your personal property (contents of the condo). In addition, coverage for additional living expenses (in the event that your condo becomes uninhabitable due to a claim), this would cover the cost of the additional costs of temporary lodgings.
There are four very important coverages that are specific to and included with all Condominium policies. It’s important to note, that there is a specific limit of insurance on these coverages and/or some insurance companies offer a flat limit for all of these three coverages combined:
Improvements and Betterments
These are the costs of repairing or rebuilding insured damage to the Unit/Suite – to the building parts (Carpet, Kitchen Cupboards, etc.). This coverage provides for the difference between what is covered by the Condominium Corporation and what it actually costs to repair/rebuild with similar kind and quality. It basically pays for any upgrades that were made to the unit since it was built. (ie. Damage to hardwood floors, but original building only had vinyl).
Condominium Additional Protection Endorsement
This will provide coverage if there is a shortfall in the amount of insurance proceeds from the Condominium and you are assessed a special assessment caused by something insured the condo policy. For example the building is insured by the Condo Corp. for $10 million and burns to the ground. It ends up costing $11 million to rebuild and the additional $1 million is assessed proportionately to each of the Condominium Corp. Unit Owners.
The Condominium Corporation did not have insurance (ie. Someone forgot to renew the insurance policy). If this happens, your contingent coverage would step in and pay up to the limit provided and up to your proportionate share of the claim (ie. Rebuilding the entire building).
The second coverage scenario is where your condominium insurance policy would cover something that would not be covered by the Condominium Corporation policy. The most common example would be if the Condominium Corporation was not able to qualify for the best coverage. In this example if not covered by the policy then each unit owner would be assessed for their portion of the loss.
Condominium Corporation Deductible
This coverage would pay the difference between your deductible on your condo insurance policy and the deductible on the Condominium Corporation policy if the Condo Corp. made you responsible for this deductible.
Condominium Insurance Packages provide coverage on a replacement cost basis, so if your condo has a fire, the insurance company will pay to repair or replace your contents with new ones of similar kind and quality. If for example your TV is stolen, the insurance company will pay the cost of a new TV.
If you home is heated by Wood or has a Woodstove, outdoor wood fired boiler/heat, or any wood burning devices – see Wood Heat Section.
This coverage is included with all Condominium Insurance Packages and it will provide coverage for:
Bodily Injury – covers injuries that happen to other people while in your Unit/Suite (for which you may be held liable).
Damage to Property Owned by Others – covers for your personal liability, if you accidentally cause property damage (ie. To an adjoining unit)
In addition to offering coverage for things that happen in your Unit/Suite, it will also extend to cover your personal liability anywhere in the world.
How Much Coverage Do You Need?
What would be the cost to replace all the contents of your Unit/Suite? You need to think from the perspective of the worst case scenario where everything is destroyed and you need to think about how much it would cost if you had to purchase a BRAND NEW item.
There is no requirement that you make a list of your possession in order to get insurance, however if disaster strikes, you will know what you are missing and it will help you significantly in knowing what you had. Creating a Personal Property Inventory is the best way to make a list and to ensure that you have the correct amount of coverage. See our: Reider Inventory Form.
If you don’t want to do the work of an inventory, the second best way is to take pictures of everything you own or of each room (one wall at a time). This will not help you in determining how much coverage you need, but it will help you in determining what was destroyed if there is a claim.
It’s important to remember to keep your inventory and/or photos stored off-site – so that they don’t get destroyed if there is a claim.
Bare Land Condominium
When insuring your Condominium Unit/Home, it is very important to determine the appropriate limit of insurance to be sure that in the event of a total loss claim, that there is sufficient limit of insurance to rebuild the Unit/Home.
Part of the Reider Insurance service is that we will conduct a rebuilding cost estimate by asking questions about the Unit/Home and using appraisal software to work out the rebuild cost of your Unit/home. In the end the appraisal software provides an estimate of the cost of rebuilding the Unit/home and the insurance companies require that clients insure to at least the amount of the estimate.
Want to know what questions we are going to ask to provide a rebuilding cost evaluation – click here for our Homeowners Insurance Questionnaire Form.
What’s Covered – Condominium Insurance Policy
Condominium Package Standard Form – Specified Perils
This type of coverage will list (or specify) the types of claims that are covered (perils insured against). In the event of a loss only those perils which have been specified on the policy will be covered. The following is a list of the most common perils covered under a specified perils coverage:
fire or lightning
explosion or implosion
impact by aircraft or land vehicles
vandalism or malicious acts
water escape from a pipe, rupture or freezing
windstorm or hail
theft, including damage caused by attempted theft
Condominium Package Comprehensive Form – All Risk
This type of policy does not list the type of claims that are covered. Instead this policy agrees to cover all losses (all risks of direct physical loss) except as specifically excluded (it lists losses that are not covered). In the event of a claim, the loss would be covered as long as it is not excluded from the policy.
This type of policy will cover all of the losses of a specified perils policy but goes much further. Due to the structure of the policy it will cover many circumstances which were never even contemplated. Some examples of common exclusions under this type of policy are as follows:
wear and tear, mechanical breakdown, rust or corrosion
war, invasion, revolution
scratching, abrasion or chipping or accidental breakage of fragile or brittle articles
Water Escape, Rupture and Freezing will not be covered if you are away for more than 4 days during the normal heating season; unless you arrange for a competent individual to check your home daily. (Some insurance companies will allow you to have an alarm system monitoring temperature and some will allow more days or do not have this exclusion).
What Are The Options?
There are many different optional coverages that can be purchased in addition to your Condominium Insurance Policy.
This is an optional add-on offered by most insurance companies. The Glass Rider reduces the deductible that you would have to pay for broken glass/window claims. This does not modify the coverage, as all of the Condo policies will already provide coverage for your glass/windows – if you are responsible by Condo bylaws. The Glass Rider just reduces the deductible and depending on the insurance company can cost about $25.00 to $50.00 per year.
Sewer Backup coverage can be added to most Condo insurance policies. In order to qualify for coverage, there is a sewer backup questionnaire that needs to be completed and approved by the insurance company. This coverage will insure the water damage to your personal property (contents), caused by escape of water from backup of your sewer, septic system, sump or drain.
When purchasing sewer backup coverage, it’s important to be aware that there is a sub-limit of coverage, which is the maximum amount of coverage in the event of a sewer backup claim. Most insurance companies will provide coverage in $5,000 increments, so the client can optionally purchase for example $5,000, $10,000, $15,000, $20,000, or $25,000. There are some insurance companies that also offer the option of sewer backup coverage, where there is no sub-limit and if available, this is the best coverage that you can purchase.
It is difficult to decide how much sewer backup coverage is the correct amount, however we recommend that clients think about how much damage could be caused and think about the absolute worst case scenario. These sub-limits have been the same for the past 20 years, however the cost of construction and cleanup have been skyrocketing.
A client with $5,000 coverage, will use most of this limit just for the emergency cleanup. If you have a finished basement and have a sewer backup claim with 8 feet of water in your basement, you will need to think about the cleanup costs & tear out of drywall, insulation and flooring, the costs to replace your furnace/geo thermal, hot water tank, electrical systems, electrical wiring redone for entire basement, new flooring, new insulation, new drywall and other building damage. In addition, you will also be looking at replacement of all of your furniture and other contents that were in the basement.
If there is a basement in your Condo/Suite or if your entire suite is in the basement, consider the cost of replacing everything. Sewer backups can and do occur regardless of how high up you could be in an apartment building, but it is more likely to happen in a basement.
We recommend clients purchase sewer backup coverage based on their actual individual needs and based on the worst-case scenario exposure. In the event that your limit is not sufficient, you will end up having to pay out of pocket for any amounts that go over your sub-limit.
One of the big mistakes people make when selecting their sewer backup limit, is that they choose a smaller sub-limit then they need, based on the odds of them actually having a sewer backup claim. It really doesn’t matter if the odds of getting a sewer backup, because for all you know it could turn out that this is the year that it happens. In Manitoba we also have a much higher risk of sewer backup. Many people think that a sewer backup claim will only happen “once every 50 years”, but this is incorrect. Every year, we have a large number of clients who have a sewer backup claim.
There have been changes in the coverage that sewer backup policies provide and there is generally no coverage for sewer backup that occurs where there is ANY evidence that it was caused by flooding or overland water or ground water. In the past insurance companies would have still paid out a sewer backup claim even if it was caused by flooding/overland/ground water, however this coverage is now only available if you purchase Overland Water Coverage.
Most insurance companies offer Overland Water coverage as an optional coverage, however it can only be added to the condo insurance policy if the client also purchases Sewer Backup Coverage. This coverage will insure the water damage to personal property (contents) located in your home/apartment/suite caused by overflow of any body of fresh water (such as lakes and rivers) and run off or surface water (such as rain).
When purchasing Overland Water Coverage, it’s important to be aware that there is a sub-limit of coverage. The amount of the sub-limit differs between insurance companies. Some companies will provide the same limit as provided by the Sewer Backup Coverage. Some companies allow you to select choices of different limits and some insurance companies do not have a sub-limit and this is the best coverage that you can purchase.
It is difficult to decide how much Overland Water coverage is the correct amount, however we recommend that clients think about how much damage could be caused and think about the absolute worst case scenario. With sewer backup coverage, the maximum exposure is usually based on the maximum amount of damage that would occur to the basement. With Overland Water coverage, there is the risk of the entire building going under water or at least the first floor having water damage.
In the last 60 years, Manitoba has had 4 major floods (1950, 1997, 1999, 2011), which have caused substantial damage. These floods would all now be considered an Overland Water claim. If you watch the news, it may come as no surprise that weather experts have said that flooding and major weather events are happening more often and the predictions for the future is that this will see this trend continue.
There is generally no coverage for Overland Water that occurs where there is ANY evidence that it was caused by ground water.
For more information on flooding, check out the Manitoba Government Flood Information Website: www.gov.mb.ca/flooding/
Most insurance companies offer Ground Water Coverage as an optional coverage, however it can only be added to the condo insurance policy if the client also purchases Sewer Backup Coverage and Overland Water Coverage. This coverage will insure the water damage to your personal property (contents) of your home/apartment/suite caused by water entering through a basement walls or foundations or basement floors.
Ground water coverage is not available from all insurance companies. Some provide a separate sub-limit of coverage and the option of adding the coverage, while others bundle the coverage together with the Overland Water coverage. Some insurance companies do not have a sub-limit and this is the best coverage that you can purchase.
For more information see our guide on how to prevent Sewer Backup, Ground Water and Flooding
Earthquake is an optional coverage, which can be added to most condo insurance policies. Earthquake Coverage will insure the damage caused to your personal property (contents) of your home/condo/suite by the shaking of the earth.
Earthquake coverage is especially worth considering if you live in an earthquake prone region, however as with any coverage it could still be worth considering. The cost of earthquake coverage is usually relatively inexpensive in Manitoba.
There are many items which are covered by the condo insurance policy, but that have sub-limits that apply to coverage. These sub-limits are the maximum amount of coverage that the insurance company will pay in the event of a loss with respect to these items. Each insurance company and type of policy will have different limits, so it’s important to ask about the special limits and make sure that they meet your needs. We recommend thinking about a worst case scenario – such as a total loss fire, how much coverage would you need to replace all of your items that fall into the following categories.
Some insurance companies offer a Special Limits Enhancement Endorsement where the sub-limits are bumped up to a higher limit and this could fit your needs. All insurance companies offer the option to get more coverage by scheduling (listing the item(s) on the policy (Personal Articles Floater or Rider). Some items (such as jewellery), will require an appraisal to establish value. An additional premium will be charged based on the value of the each scheduled item.
- Business Property (pertaining to a business, profession, trade or occupation)
- Books, Tools and Instruments
- Computer Hardware pertaining to a Business trade or occupation (including farming)
- Computer Software
- Money or Bullion (including gift cards, cash cards and gift certificates)
- Watercraft (including furnishings, equipment and trailers that are not licensed (Coverage is only provided on a Specified Perils basis even if the policy would normally provide All Risk) – if you have a boat see Boat Insurance Section
- Animals, birds and fish
- Spare Automobile Parts
- Motorized lawn mowers and other modernized gardening equipment or snow blowers (including attachments and accessories)
- Trading and collectible cards (including sports cards), comic books, sports memorabilia
- No Sub Limits if caused by Specified Perils, otherwise:
- Jewellery, watches, gems
- Fur garments and garments trimmed with fur
- Numismatic property (such as coin collections)
- Bicycle, tricycle, unicycle (including equipment and accessories)
All policies contain a deductible clause – this is the portion of the loss that you will be responsible for. If you have a break in and the claim comes to $2,000 – you would be responsible for the deductible (in Winnipeg the standard deductible is $500) and the insurance company would pay the remainder. One purpose of the deductible is to prevent smaller claims and therefore a reduction in premium is available for higher deductibles.
One strategy for reducing your home insurance cost is to go with a higher deductible. You can get a discount for taking a higher deductible and insurance companies offer options such as $750, $1,000, $2,500, $5,000, $10,000 and $25,000. The decision to go with a higher deductible will save you money if you do not have any claims, however every client should chose a deductible that they feel is appropriate to what they would be willing to pay if they have a claim and compare this to the cost savings provided. The most popular deductible increase options are the $1,000 or $2,500 deductible.
There are different payment options available such as:
- Full Payment
- 3 Pay Plan
- Monthly Automated from bank account or credit card
- Debit Card
- Credit Card (Visa, Mastercard, American Express)
- Online Banking
COTTAGE, BOAT, RENTED DWELLING OR HOME BASED BUSINESS
Cottage or Seasonal Residence or Seasonal Trailer
Home Based Business
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* Please note all types of policies have exclusions, conditions and limitations. This information is not intended to be a full explanation of coverages and in all cases the wording of the actual insurance policy will apply.