Insuring your home

Owners' Insurance for Condominiums, Flats, Apartments, Townhouses, and Duplexes

In Canada, apartments or flats are known as condominiums, often referred to as "condos" or "strata units". Multi-unit residential buildings are insured by Strata Corporations, known as Body Corporates in some other parts of the world.

A building's Strata Corporation is responsible for obtaining appropriate insurance for the building. It is each owner's responsibility to arrange insurance for their personal property (which includes upgrades to the interior of the unit) and other liability issues.

Many condo owners place themselves in financial jeopardy by neglecting to insure their condos. They believe that that their Strata Corporation will carry sufficient insurance to cover major losses to the building and therefore it is not worth taking out insurance. Some condo owners - often new immigrants - don't feel that they have enough personal possessions to warrant acquiring insurance. In fact, condo owners place much more than their own personal possessions at risk.

This example illustrates why:

Mr X unintentionally leaves an iron unattended, causing a fire which results in extensive damage to his condo and other strata units in the building.
The cost to reconstruct or repair the building would be covered by the Strata's Corporation's insurance policy. But there are numerous other costs which could fall to Mr X, including:
Replacing personal possessions, including appliances, clothing, furniture, etc. = $30,000
Replacing upgrades completed over the years to Mr X's strata unit, including flooring, carpets, countertops, etc. = $50,000
Alternative accommodation and extra expenses incurred while the building is being reconstructed or repaired = $25,000
Personal liability for the damage caused to all of the affected strata unit owners (these individuals or their insurance companies would likely sue Mr X for their losses), including damages to contents and improvements of their strata units, plus their living expenses = $650,000
Deductible of Strata Corporation insurance = $1,000

If Mr X has adequate condo insurance, his insurance company would respond to cover the claims listed above. The only expense that Mr X would pay would be his own insurance deductible which would range typically from $500 to $1,000.

In instances of a major incident such as a fire, claims can reach over $1-million. An uninsured condo owner could therefore face financial ruin under these circumstances.

Other key benefits of condo insurance:

With a good insurance policy, water damage caused by the condo owner is covered. An overflowing bathtub or forgotten open tap is a high possibility scenario which can cause serious damage to a building. Condo insurance, if structured correctly, will pay the Strata Corporation insurance deductible (which can range from $1,000 to $25,000 in the greater Vancouver area) should the condo owner be found liable for claims due to water damage.
Personal property is insured while temporarily away from the condo i.e. while the owner is travelling.
Liability coverage applies worldwide. For example, if the condo owner unintentionally injures someone while on holiday (except when driving), condo insurance will provide coverage for personal liability claims.
Voluntary medical payments. This is no fault coverage for injuries caused to another person for which the insured is not legally liable. Typically this coverage would be for items such as first aid, ambulance charges, etc.

Annual premiums for condo insurance are generally low: typically a few hundred dollars a year.

Homeowners' insurance

There are two types of property covered by homeowners' insurance:

Building: which includes fixed structures pertaining to the building and located on the premises, additions in contact with the building, permanent fittings and fixtures, and materials, equipment, supplies for minor repairs, and indoor decorative plants an trees.
Personal property: which includes all property owned by the insured that does not form part of the building and improvements to the building.

In the case of homeowners, as a general rule, insurance companies set 70% of the building amount for coverage of personal property. A homeowner may want to adjust this amount higher, depending on the amount of personal property in the home.

High value items such as jewellery, artwork, camera equipment and musical instruments may require separate insurance for additional cost. Special coverage should be discussed with your insurance agent.

Like condo insurance, homeowners' insurance provides coverage for replacing personal possessions, replacing upgrades, alternative accommodation and extra expenses incurred while the building is being reconstructed, personal liability, and voluntary medical payments. Homeowners' insurance also provides for repairs or reconstruction of the building should a valid claim be made.

Homeowners' premiums vary based on a multitude of factors: age, location and size of the house, number of families living in the dwelling, and types of heating, plumbing, and construction materials, being just some of the variables.

Tenants' Insurance

Tenants' insurance: essentially insurance coverage is identical to condo owners' insurance, with the following differences:

Lower limits for alternative accommodation and extra expenses in the event of a loss which prevents them the tenants continuing to live on the property.
No coverage for improvements done to the property by the tenant

Premiums for tenants' insurance are generally higher than condo owners' insurance.

This information is intended to provide general information and not to replace the advice of your insurance broker.

If you have questions about insurance in British Columbia, please contact:

Grace Catao at Habitat Insurance Agencies
grace@habitatinsurance.com, or
tel +1-604-438-5241.