Condominiums can refer to either the entire building or the individual unit owned by a certain person. It can be explained as: a condominium is a form of property ownership in which the homeowner holds title to an individual dwelling unit, an undivided interest in common areas of a multi-unit project, and sometimes the exclusive use of certain limited common areas.

The corporation of a condominium unit has certain responsibilities including securing adequate insurance for the building and the common areas. A condominium unit owner does not necessarily have to purchase insurance. Of course, if this is your choice and there is a fire situation you are on your own for living expenses or replacement of property. Worse yet, you could be the one who dropped that lit cigarette into the trash which caused the fire. Now you will need personal liability insurance which is provided under a condominium unit owner or tenant policy.

Insurance companies see the entire building as being a rather high risk, especially while under construction. The units are not difficult to get insurance for and the individual ratings are not considered high risk. In fact, condominium unit owner insurance is one of the least expensive forms of personal insurance.

If you are seeking insurance for the entire condominium building then you need to be sure to include all the common areas. These could include a recreation center, swimming pool and change rooms, outdoor kitchen/barbeque centers, gazebos, cabanas, parking lots and commonly shared garden areas. It is important that liability be noted and extended for the corporation for all spaces that are accessible to all condominium members. The parking lot, underground parking and other storage areas should not be overlooked. The values need to be adequate for reconstruction in case of a total loss. The liability needs to be in place not only for damage to persons or property but also for the directors and officers of the condominium corporation board.

What if you own a unit? What do you need for insurance? You need to determine what the replacement cost is for all the items you have within your unit. Have you added on to the unit? This would include items such as upgrades to the flooring, a hot tub, built-in bookshelves or new granite counter tops. You need to consider how much money you would need if there was a bad fire and you could not return to your unit for six months or more. You also need to consider the possibility of a loss assessment being levied by the corporation. It is a good idea to do an inventory and then talk to your agent or broker. You can go over what the different coverages will give you and make a decision based on your particular needs. Be sure to amend this coverage as your needs change.