Condos, renovations, and insurance: what you ought to know


Picture this: You moved to your condominium 20 years ago, when everything felt all new and fresh. Now, that old linoleum on your kitchen floors are stained and peeling, and also the cupboards are outdated and covered inside a film of grime even the toughest elbow grease can't remove. You decide to invest in some kitchen upgrades, but realize that the condominium corporation won't insure the renovations. What are your choices?

Most condominium corporations offer some form of property insurance coverage for individual unit owners – but what exactly is covered is a vital question to inquire about. Many of these insurance policies include coverage for just the outside of the home, such as harm to the roof and windows (but it's better to check your policy, because the rules vary). If you wish to renovate the inside of your condo unit, you will need to personally insure the job.

Get insurance with 'betterments and improvements' coverage

Condominiums are run by condo corporations, which operate somewhat like mini-governments. They outline declarations, by-laws and rules that unit owners must stick to that aren't typical for freehold homes, like a no-pets policy, or window coverage requirements (e.g., no bedsheets as curtains). By buying or renting a condo, you're opting into a unique community, which is represented through the condo corporation. From an insurance coverage perspective, that can make things tricky if a person day you decide to make upgrades towards the inside your unit.

Even freehold homeowners should notify their house insurance provider if they're taking on a significant renovation because renovations will typically boost the value of your house, which is important for your insurer to know whenever they one day have to cover the cost of replacing it. However, condo owners need to take a rather different approach.

According to Pieter Louter, CEO of Onlia, a provider of home and auto insurance, condominium corporations will normally not include coverage for “betterments” or “improvements” to individual units. That means it's as much as the apartment owner or renter to secure this sort of coverage themselves. When they already have separate home insurance, they can see if it's contained in their policy.

In general, people should seek advice from their insurance company so they understand what their situation is

Either way, should you own or rent a flat it's best to not rely solely around the condo insurance provided by your condo corporation – particularly if you are planning to renovate someday. Purchasing your personal supplemental property insurance will provide you with the safety you need.

“The condo corporations' obligation would be to rebuild the unit towards the original construction regardless of whether the system owner has made improvements or upgraded the unit,” says Elektra Hilton, Director of Operations of HUB Customer Central. This could be a problem if your hypothetical new oak cabinets are destroyed by a fire, and the condominium insurance only will pay for cheap pressed wood as a replacement.

According to Louter, however, a flat corporation may provide less coverage than expected for the total amount of original construction, therefore it is vital that you know in advance what's contained in the commercial policy.

When you've separate insurance which includes betterments and enhancements coverage, your insurance will cover the value of your home with those upgrades – not only the initial construction. If you own a condominium and just have access to the insurance provided by the condo corporation, you may want to rethink your plans.

Call your insurance company before you begin renovations

Renovations could possibly get messy. For instance, let's say you choose to use a brand new dishwasher, after installing engineered hardwood floors, but you find that something went wrong and suddenly you have a flood to deal with. You'd want to make sure that you have insurance to pay for the replacing the newly installed floors. That's why it's crucial to communicate with your insurance provider in early stages.

“If you're making a fairly major renovation it is advisable to insurance companies,” says Louter.

Condo insurance also provides coverage for special insurance assessments that could be made by the condo corporation. But there are other benefits beyond renovations coverage that separate condo insurance can provide you with.

“It offers protection for unexpected events, like should you unintentionally damage another unit, or maybe someone injures themselves within your condo,” explains Hilton, who recommends that condo owners purchase supplemental condo insurance, in addition to the insurance provided through the corporation – even when they are not undergoing any renovations.

A condo unit owner should review their improvements and betterments coverage limits to ensure that the amount available covers the total worth of all unit improvements/upgrades

“Any renovation over $5,000 ought to be reviewed together with your insurance provider.”

Onlia, for instance, offers coverage for 50% of the home's contents for betterments and enhancements, as well as $1 million dollars of liability. “Our customers must choose their limit for personal property when binding their policy,” says Louter. “We offer various limits between $25,000 and $150,000. Our policy then provides betterments and improvements insurance within the order of 50% from the personal property limits.”

Do your due diligence

If you're hiring a contractor to complete the work for you personally, you need to make certain they likewise have the correct insurance in case something goes completely wrong with the job. Both Louter and Hilton agree that ensuring your contractor has their very own insurance coverage is essential before you hire them.

She also adds that if the renovations are enhancing your home, the need for your house will probably increase. Ensure that the betterments and improvements coverage is sufficient for the new value of your house.

Always ask for clarification out of your home insurance carrier, instead of making assumptions. It's easier to be ready than find out too late you don't have coverage for renovations that went sideways.

Once you have done your research you may enjoy both security of knowing you have the right property insurance coverage, and also the beautiful new upgrades to your condo.