Renters Insurance vs Condo Insurance: Which Do You Need?

Posted on May 15, 2019


Of the 14 million Canadian households surveyed in the 2016 census, nearly 10 million of them owned their homes.



What homeowners have in common with condo owners and renters is insurance. Depending on the type of dwelling you live in, and whether you rent or own it, will determine the type of insurance policy you need.

Knowing the difference between is the key to buying the right policy and ensuring your home is protected. And if you already have insurance, you should make sure that it's the correct one.

Keep reading to learn more about renters insurance vs. condo insurance.

When Do You Need Condo Insurance?

If you rent your condo, then you need renters insurance. But if you own your condo you need condo insurance. 

As an owner, your insurance has to include coverage on the actual structure of the property. It functions similar to homeowners insurance, with one key difference.

Because your condo is a multi-unit dwelling, you need only acquire insurance for the portion of the building you own. The condominium association has its own insurance for the outside of the building, at least to a degree. Anything that happens inside your condo as a result of something related to the overall structure, isn't your responsibility.

Your condo insurance usually begins at the studs and covers everything inwards. With some exceptions, everything within those walls, floors, and ceiling studs, is covered by your insurance policy. Everything beyond is either covered by your neighbor's insurance policy or the association. 

Condo insurance covers damage and loss of personal property and belongings. If something were to happen in your condo that caused damage to another, a condo insurance policy will also cover liability. Depending on the policy, you may even be covered for living expenses if you needed to move out while repairs were performed.

When Do You Need Renters Insurance?

If you rent the space you live, you need renters insurance. Renters insurance covers you whether you rent a home, a condo, or a unit in an apartment building.

However, renters insurance is typically only available to you if your name is on the lease agreement. If you rent a bedroom in a shared home, for example, and you didn't sign the lease, you likely won't be covered by renters insurance. Another circumstance where renters insurance wouldn't apply is in the case of sublet arrangements.

This is because a renters insurance policy only covers the tenant of a dwelling that's rented or leased from another person or entity. In some cases, renters insurance may provide coverage for the guests of that tenant as well.

But because a tenant doesn't own the space in which they live, they're not required to insure it in the same way a condo owner would. Their insurance policy will only cover their own personal property and the content of the apartment.

Renters insurance also provides coverage for liability cases as well. So in the case of a fire or other damage that's caused by your own negligence, the liability coverage will pay for any damages.

What’s the Main Difference?

There are two main differences between renters insurance and condo insurance. These are what are covered by the policies and the added layer of condo association insurance for condo owners. Let's explore these in more detail.

What Is Covered

The glaring difference between the two insurance policies is that renter's insurance doesn't have any coverage on the building or unit itself. Renters insurance covers the contents of the interior whereas condo insurance covers the contents and the structure.

So while cabinets, bathroom fixtures, and walls would be covered by condo insurance, renters insurance will only cover the personal belongings of the tenant.

Condo Association Policy

If a rental unit is damaged as a result of an issue with the building itself, the owner of the rental unit should have liability insurance to cover it. For condo owners, this situation is a bit different.

If you own a condo, you're considered a part owner of the building itself. As a part owner, you're covered for this type of damage by the Condo Association Insurance policy. Anything beyond the studs of the units is the responsibility of the association.

That means that in the case an elevator fire damages your unit, your condo insurance policy won't cover the damage. Because the fire originated with the building itself, the condo association insurance should be covering the damages.

But in the case that the entire building burned down, the association insurance is really only expected to pay for the bare minimum. They'd be expected to rebuild the structure and replace things like wiring and plumbing. But your condo insurance would cover the contents of your content, including everything from furnishings to floors.

The line between what's covered by the association and what's covered by your condo insurance can sometimes get complicated. For that reason, it's important to thoroughly review the association documents that outline those responsibilities. An insurance agent can help you understand exactly what's covered by whom, and what you're entitled to in the case of unintentional damage.

What Are the Similarities?

Both renters insurance and condo insurance provides coverage for property, liability, medical expenses, and loss of use. 

Getting the right insurance for your personal property means gathering an inventory of your valuable belongings and accurately determining their worth. Once you have an idea of how much you would need to cover their loss, you can purchase insurance in the amount you specify. This can include clothing, furniture, electronics, appliances, jewelry, and even toys.

The personal liability portion of both policies covers damages in the case that a third-party is injured on your premises. These can cover medical expenses and legal fees in the case that that person decides to seek compensation. They'll also help cover any unintentional damage to your unit or another unit.

Some renters insurance and condo insurance policies will have a loss of use coverage as well. In the event that you require a temporary residence, your living expenses would be covered. However, this usually only applies to you if the lost unit was also covered by insurance. 

Do You Legally Need Insurance?

If your house is paid off and you're the owner, you're not required to have home insurance by law. 

With that said, if you plan on getting a mortgage, you'll need proof of insurance before you're approved. That applies to mortgages for homes as well as condos. 

Renters insurance is also not required by law. But it's in your best interest to get it even if your landlord doesn't require it of you. Because in the case of an accident like fire or flooding, your landlord is not responsible for replacing your personal belongings.


How to Buy the Right Insurance

If you have condo insurance as a renter, you're paying more for insurance than you need to. More importantly, you have insurance over something that you don't even own. But it's actually the opposite situation that can land you in big trouble.

Buying renters insurance when you really need condo insurance is a situation requiring immediate remedy. If something were to happen, you'd have absolutely no coverage on your condo. Meaning that you'll be expected to pay for the damages and repairs.

When you're looking fat policies, look for some form of dwelling coverage. This is the key difference in renters insurance policies and condo insurance policies. A renters policy won't have any details regarding coverage over the building outside of liability, whereas this is one of the most important parts of a condo policy.

Buying condo insurance requires some research into home insurance costs. You should have a firm grasp of the construction costs where you live. You should also know what parts of construction you're responsible for in the case of a disaster.

Arming yourself with this knowledge will give you a better idea of how much your insurance should cost. That involves having enough coverage to fully restore your unit, but not too much that you end up at a loss in monthly premiums.

Do You Have the Right Insurance?

Condo insurance and renters insurance both have liability coverage and coverage for your personal belongings. The main difference between them lies in coverage regarding the actual building.

Condo owners are required to have insurance for the unit they own, including the structure. Whereas the building that a renter lives in is covered by the landlord's insurance liability policy.

Having the right insurance is imperative. To learn more about home insurance in Canada, check out our blog.





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