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Condo coverage has some special wrinkles

So you've bought a condo and are just about to move in. Being a responsible new homeowner, you know you need insurance. Unlike owning a detached or semi-detached house you know you will not need to worry about insuring the structure; the condo corporation will take care of that, right?

Your share of those premiums will come out of your monthly maintenance charges.

What you need is a policy that covers just the suite: insurance against fire, theft, damage from the usual perils plus a chunk of liability coverage. Much like a renter's insurance policy.

Your agent sells you a policy, you write a cheque and sleep like a baby. A word of warning! That sound sleep could be jarringly shattered in a variety of ways, says a leading expert on home insurance.

Condo insurance is very different from single family residences, says Irene Bianchi, vice-president claims and corporate services at RSA Canada, a leading property insurer. It is vitally important for any condo owner to know exactly what is covered and the extent of their own liability.

;Before speaking to an agent, spend the time to do a little research. Find out what is covered by the condo corporation's policy on the structure and what is not. It may come as a surprise.

Generally speaking, the corporation's policy covers the structure, common areas and liability outside your suite. A homeowner's policy covers everything from the paint on their walls out,says Ms. Bianchi.

That is only generally speaking. Some condo corporations may have their own special wrinkles. More about that later.

That policy is certain to have a deductible and it might range from $20,000 to $40,000, says Ms. Bianchi. If the project has 200 suites, an event like a flooded basement could mean every suite owner has to cough up between $100 and $200 to pay their share of that deductible.

Then there is the matter of premiums. Condo boards are always under pressure to keep monthly maintenance low, she says. The degree of that pressure can sometimes result in them opting for insurance based on cost rather than coverage

It is really important to know what the corporation's policy covers, she says. Because as a suite owner, you may have to fill in the gaps. One of those gaps is likely to be upgrades to your suite. Most condo corporation policies only cover fixtures and features of what they define as a standard suite.

Buy a resale or new suite with gleaming marble countertops and Brazilian rosewood flooring either through paying for upgrades or renovation and chances are they are not covered. It is also likely your balcony is not covered under a corporation policy.

Ms. Bianchi says anything attached to a standard suite is the responsibility of the suite owner and, surprisingly, that can cover balconies.

The most common claim for condo owners, and often the most contentious, is water damage. Suppose an upstairs neighbour lets the water run over the tub and it flows down your walls or a pipe springs a leak. Who pays for the damage? The condo policy or the suite owners household coverage?

Suppose a slow leak develops in the plumbing buried in walls. Again, who pays to correct the damage?

It can be a particularly difficult situation in condos where the residents spend a great deal of time away, say, at a Florida home or a summer cottage, she says.

The leak goes unnoticed and unresolved and when they come back major repairs are in store. The question is what caused the leak and who is on the hook to pay for repairs.

The good news for condo owners is that premiums for liability and theft coverage will be significantly less than for single family dwellings. Condo suite owners need not worry about icy sidewalks; the corporations policy covers that.

And save for those suites on the ground floor and first few levels, especially if they have balconies, the risk of theft or break in is significantly less than that of a single family home.

Less risk equals lower premiums.

Ms. Bianchi still recommends condo owners get $1-million in liability coverage and replacement cost insurance for possessions. The cost of that theft insurance will of course depend on that value of the possessions.

What I would advise everyone is to first do their homework, she says. Know up front what the condo corporation's policy covers and share that with your agent.

Then it is a matter of tailoring your policy to fill in the gaps.

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