March 04, 2020

Apartment owners beware: building insurance stops at your apartment door

Buying a new apartment can be exciting, and with all the emotion and upheaval of moving into a new place, it can be easy to overlook (or even be unaware of) the need to make sure you’re properly insured. The problem is, this oversight is often not realised until it’s all too late.

The sad fact is, many people don’t even realise they need their own insurance when buying into a condo or co-op, and assume that their building’s insurance covers everything. It doesn’t. That’s why it is important when you’re buying a new apartment, to know what is covered by the building owners’ insurance and what you need to get cover for personally. There is a checklist at Flex Insurance.

Of course, you also need to know what kind of ownership you have over your unit, so let’s look at that first.

Condo or Co-op - what difference does it make?

Quite a big difference actually. Firstly, you don’t want to be under-insured. But at the same time, you don’t want to be paying twice for insurance cover either – namely, once through your own insurance premium and once through your building fees.

What’s more, owners in a condo need to insure slightly differently to those in a co-op. If you’re in a condo, your insurance should cover contents as well as damage to your flooring, fittings and fixtures (e.g. range-tops, ovens, bathtubs, etc) – all the things that are part of your unit.

If you own under a co-op arrangement, you’re more likely to just need contents insurance, covering the things you personally own and bring into the apartment. Ideally, since the co-op owns all the fittings and fixtures in your apartment, the co-op’s insurance should also cover these things. But the critical word here is ‘ideally’.

Read the fine print.

Actually, read ALL the print, then read it again, and make sure you know exactly what the building’s master policy covers and, more importantly, what it does not.

Usually (but not always), the building insurance master policy covers such things as building structure (including walls, foundations, wiring, plumbing, sewer and gas lines), common areas such as lobbies and entrance halls, passages, grounds and driveways, fences, steps, stairwells, elevators and fire exits, shared terraces, recreation rooms, gyms and pools, roofs and skylights.

Be aware though, a master policy may have been written years ago, without keeping up with advances in technology, building requirements or even improvements to the property itself. This goes for condos and co-ops.
A good way to find any gaps is to think of situations where you might need to claim on your insurance, and make a list of all the things that would be affected. Common scenarios are fire, smoke or water damage, theft, malicious or accidental damage, motor blow-out, personal injury, and damage to others’ property. Then look at both damage caused from within your apartment and damage starting from elsewhere in the building. After considering these scenarios and making a list of all the things you may need to pay for, compare these against the items included and excluded from your building’s master policy. Whatever is missing, should then be covered under your own policy.

If there’s anything missing that is obviously the co-op or condo corporation’s responsibility, this should be raised with those entities.

In conclusion

Always make sure you’re properly covered and if there are any grey areas, speak with an insurance agent, consultant or your fellow apartment owners, because good insurance shouldn’t just provide cover, but also peace of mind.

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