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Condo Master Policy: What You Need to Know

Condos are attractive because they offer so many advantages – they work well as starter homes as a rental investment or for empty-nesters seeking to downsize. They’re low maintenance and easier to manage because certain responsibilities are shared with other owners in the condo development. Take insurance for example. The structure and public areas of the condo are usually covered by a Condo Master Policy  (also known as Condominium Association Insurance).

The Condo Master Policy is a building insurance policy which typically includes liability and property damage coverage. For example if someone is injured in a common area maintained by the Condo Association or if fire or theft causes damage to common areas such as the lobby this policy would cover the costs of medical treatment and repair. All unit owners in the condo development are automatically included as policyholders and part of the condo fees they pay goes towards the premiums.

What does the Condo Master Policy cover?

Sometimes there is a misconception that because there’s a master policy in place unit owners don’t need to get any more insurance. This is not true. A master policy only offers limited coverage. It covers the structure common areas of the building and your standard unit (i.e your unit as it was sold by the builder without any improvements or upgrades you may have made). Which leaves you on the hook for all of your personal belongings inside your unit your own personal liability as well as the improvements you made to your unit. You would also be on the hook for any shortcomings in the Condo Master Policy. For example if there’s damage to a common area but that type of claim isn’t covered or the amount of coverage is insufficient you along with other unit owners would be liable for what it does not cover and the cost would have to be split among you.

Is there a deductible?

Condo master policies do have deductibles and these can be very high. In the event of a claim the unit owners could be responsible for paying the deductible depending on the by-laws of your condo corporation and who is at fault for the damage.

Personal Condo Insurance

Additional insurance is not typically compulsory but it is always a good idea. Furthermore if your condo is financed or mortgaged then your lender will almost certainly require you to get personal condo insurance. This covers what your Condo Master Policy does not including your personal property and liability in the event that someone gets injured inside your condo unit or you cause damage to another unit. For example if you left the tap on in the bathroom which then floods the unit below you the master policy would not cover you in such an instance and so you would have to rely on your personal condo insurance – or you’d have to pay out of pocket.

Your personal condo policy would also cover the kinds of shortfalls in your master policy mentioned earlier and if your Condo Corporation were to levy special assessments for any reason this policy would also cover your share as well as the deductible for any claims under condo master policy. As these can be large expenses (into the thousands of dollars) personal condo insurance gives you peace of mind that you won’t be footing the bill.

Your Condo Association will take care of the master policy but personal condo insurance is up to you. Your master policy leaves gaps that  could cost you quite a lot. If you don’t already have condo personal insurance or just need more details about the one you have speak to your broker today.