Why every Owner (and Tenant) should have their own Insurance Policy
I read through a lot of Strata Minutes and Documents, so I read about a lot of situations (always unexpected accidents) in which personal insurance comes into play, and all too often, situations in which the owner didn’t have proper insurance. Every set of AGM Minutes, regardless of the building, stresses the importance of owners having personal insurance on their unit, and for good reason. Here’s why.
Note: Your Insurance Agent is the expert here. Query them, and ensure you’re covered.
Every Strata Building has an Insurance Policy (renewed every year) that covers common building assets, common and limited common property and original fixtures (those outdated carpets, counter tops, lighting, etc). The most important part of the Strata’s insurance are the deductibles! A deductible is the amount of money that you have to pay upfront, before the insurance policy kicks in.
- Water Damage: can be anywhere from $5000 and up
- Flood Damage: can be anywhere from $5000 and up
- Sewer Damage: can be anywhere from $5000 and up
- Earthquake: 10%
- Lock & Key: $250
One of the most important reasons to have your own personal insurance policy is to ensure that you’re covered for the Strata’s deductibles, in case you can damage. For a simple example, say the water damage deductible for your building is $25,000. If you leave the sink running, and end up causing $100,000 worth of damage to the unit, you would have to pay $25,000, and the Strata’s insurance would pay the remaining $75,000. If your personal insurance covers the deductible, they would pay the $25,000, while your Strata would cover the rest. This is well worth the small monthly cost of personal insurance.
Many Mortgages are subject to you having your own insurance to cover potential damages.
It is your responsibility to ensure that fixtures in your home are working properly (i.e. dishwashers, hot water tanks, clothes washer, etc), because if they leak, it’s your fault, but your own personal insurance can cover you in these situations.
Here’s a great answer to the question: Who Foots the Bill for Under-Insured Damages?
Questions to Ask your Insurance Broker
You need to have your insurance in place for the day the property officially becomes yours (Completion Day!). Inquire with Insurance Brokers beforehand to have the policy in place, and feel free to shop around to get a sense of the different rates you can get.
First things first, always have your building’s insurance policy with you to give to your Insurance Broker. You can get this policy from your Strata Property Manager, or you can usually find the newest policy attached to the most recent AGM.
Secondly, here are a few questions that you can ask to clarify what you’re covered for:
1. If the strata suffers damage that started in my unit, what amount of coverage is provided in the event that I am charged back the strata’s deductible?
2. If there is damage to my unit that is covered by strata (walls, floor, and ceiling) but the damage is under the strata deductible (i.e a roof leak) what amount of coverage is provided to repair this damage?
3. Are my contents covered, for damage or theft, whether or not it’s my fault? Are the upgrades and renovations I did to my home covered?
Insurance is very important, whether you’re an owner or a renter, so make sure that you’re covered. A couple extra dollars a month can save you time and money in event of an accident.