If you own a condo in Ontario, you have probably heard this reassurance: the building is insured, so you are covered. That statement is partly true, and the missing part is where expensive surprises live.
A condominium corporation carries insurance on the building. You carry insurance on your unit, your belongings, and your liability. Those two policies are meant to fit together. When owners assume the building policy does the whole job, the gaps usually show up after a claim.
What the Building's Master Policy Typically Covers
Under Ontario condominium law, the corporation is generally required to insure the common elements and the standard units against major perils such as fire and water damage from insured causes. Common elements include the structure, hallways, lobbies, elevators, roofs, and parking garages. The standard unit is the unit as it was originally built, before any owner upgrades.
Think of the master policy as protection for the building as a whole. If a fire damages the structure, or a burst pipe in a common area damages several units, the corporation's policy is typically the one that responds.
What the master policy does not do is insure your life inside the unit. It does not cover your furniture, your electronics, your clothes, or the upgrades you paid for. It does not cover your personal liability, and it does not pay your hotel bill if a covered loss makes your unit unlivable. Those are the jobs of your own condo owner policy.
What Your Own Condo Policy Is For
A condo owner policy, sometimes called a condominium unit owners policy, fills in around the master policy.
Improvements and betterments. This is the coverage for upgrades beyond the standard unit. New kitchen cabinets, upgraded flooring, a renovated bathroom, custom lighting, and built-in shelving are common examples. If a covered loss damages those upgrades, the building policy typically restores only the standard unit. Your own policy is what pays to restore the unit you actually live in. Owners who renovated years ago and never updated their policy often find the policy still reflects the older version of the unit.
Contents. Your personal belongings are not covered by the building policy. Contents coverage protects furniture, clothing, electronics, appliances you own, and other personal property, both at home and often while temporarily away from it. Estimate what it would cost to replace your belongings at today's prices, not what you paid years ago.
Personal liability. If a guest is hurt inside your unit, or if water from your unit damages a neighbour's unit, liability coverage is typically what responds to legal defence costs and damages you are legally responsible for, up to your limit. In a building where units sit above, below, and beside each other, one leak can affect several neighbours.
Additional living expenses. If a covered loss makes your unit uninhabitable, this coverage typically helps with the extra cost of living elsewhere while repairs are underway, such as a hotel or a short-term rental and added meal costs. Condo repairs can take time, so a realistic limit here matters.
The Deductible Gap That Catches Owners Off Guard
One of the least understood parts of condo insurance is the corporation's deductible. When the building policy responds to a claim, the corporation pays a deductible first. If the loss started in your unit, or if the bylaws allow it, the corporation may pass some or all of that deductible back to you.
This is where loss assessment coverage, sometimes called deductible assessment coverage, earns its place. It is designed to help when the corporation assesses owners for a share of a covered loss or passes a deductible back to a unit owner. Without it, an owner can face a large out-of-pocket bill even though insurance responded to the claim. Ask your broker whether your policy includes this coverage and whether the limit matches the corporation's current deductible.
Water Damage Deserves Its Own Conversation
Water is the most common source of condo claims and the most confusing. A leak from a neighbour's dishwasher, a failed washing machine hose, a burst pipe in a wall, and sewer backup can each be treated differently depending on the cause and the wording.
Do not assume that because one type of water damage is covered, every type is. Ask specifically about water from inside the building, water that enters from outside, and sewer backup. Sewer backup often requires a separate endorsement or a specific limit. Read the exclusions, not just the list of covered perils.
Five Questions to Ask Before You Renew
Review your condo policy when your situation changes, not only at renewal.
First, what does your corporation's master policy cover, and what is the corporation's current deductible? Get the certificate of insurance from your property manager, and share it with your broker.
Second, does your own policy reflect your current upgrades? If you renovated, added built-ins, or replaced flooring, your improvements and betterments limit should reflect that work.
Third, is your contents limit realistic? A quick room-by-room estimate is more useful than a guess.
Fourth, does your policy include loss assessment or deductible assessment coverage, and is the limit enough for the corporation's current deductible?
Fifth, what is your liability limit, and does it make sense for a shared building? Liability is often the least expensive coverage to increase and the most consequential if a claim involves a neighbour.
If you rent out your unit, mention that too. An owner-occupied policy and a rented-unit policy are not the same.
The Bottom Line
The building's policy protects the building. Your policy protects your unit, your belongings, your upgrades, your liability, and your living costs after a loss. Neither one is complete without the other.
If you are not sure how your policy lines up with your corporation's master policy, bring your corporation's insurance summary and your own declarations page to your broker, and ask where the gaps are.
Related coverage: condo insurance and condo insurance in Vaughan.