Condo Insurance vs Home Insurance: What's the Difference?

Choosing between a detached home and a condo can be a surprisingly challenging task; there are several factors that you need to consider, including the location, size and overall cost.

However, there's another factor that many Canadians overlook the importance of — insurance.

If you've recently asked yourself home insurance questions like, "do you need homeowners insurance for a condo?" or "what's the price difference between condo and home insurance?" then be sure to continue reading.

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Differences between detached homes and condos

Before assessing the differences between home and condo insurance, we need to understand the discrepancies between the two types of living spaces.

What is a detached home?

Most people are familiar with the definition of a detached home. Modern detached homes can range in size; everything from modest bungalows to vast mansions count as detached homes.

Buyers generally purchase these living spaces on credit. Detached homes cost hundreds of thousands or millions of dollars, making it nearly impossible to buy one outright. That's why many buyers will make a down payment on a detached home (5% to upwards of 20% of the home's value).

What is a condo?

On the other hand, a condo (sometimes referred to as a condominium or strata) is similar to an apartment. Both are generally located in highrise buildings or complexes; the critical difference between condos and apartments is that condos are generally purchased, while apartments get rented.

Condos tend to be much smaller than detached homes, usually totalling out to about 1,000 square feet or less. This is noticeably smaller than the average detached home in Canada, which is approximately 1,792 square feet.

Like a detached home, buyers generally purchase a condo on credit by making a downpayment.

Bonus tip — In many cases, townhouses are classified as condos.

Condo insurance vs homeowners insurance — similarities and differences

Condo insurance and homeowners insurance are relatively similar, but they have some differences that potential buyers should be aware of.

How does homeowners insurance work?

For those that have never purchased homeowners insurance before, here's a quick crash course.

Homeowners insurance provides you with financial coverage in the event of a "risk or peril" (an insurance term for unforeseeable incidents). Some common examples of risks and perils covered by homeowners insurance include:

• Fire and smoke damage
• Water damage
• Theft and vandalism
• Lightening and storm-related damage
• Wind and hail

If one or more of these events were to occur (and you were not deemed responsible for the damage), then your insurance provider will cover the costs of repairing or rebuilding your home.

Homeowners need to make regular payments to remain covered. Failing to miss one or more of your insurance payments could force you to pay for that unexpected roof repair out of pocket. This is why we always recommend staying on top of your homeowners insurance payments.

How does condo insurance work?

There's a common misconception that you have to buy homeowners insurance for condo units — to make things clear, the coverage is referred to as condo insurance.

Condo insurance is relatively similar to homeowners insurance but with a handful of differences. The most notable difference is the area that is covered. When you purchase condo insurance, you're only protecting your unit and belongings, not the entire building.

Additionally, condo owners tend to need coverage for fewer events. For example, if your condo is on the top floor of a building, you likely don’t need to add overland water coverage to your policy. This is because there's a minuscule chance that flood water would reach the top floor of a multi-story building.

If you're unsure of what your condo insurance policy covers, reach out to your insurance provider as soon as possible. Being aware of what your policy does and doesn't cover can help you decide if you need to make any additions in the future.

Condo insurance vs home insurance — cost differences

It's quite challenging to determine an exact number when comparing the price difference between homeowner and condo insurance.

As with many other insurance policies, several factors heavily influence your rates. Some examples of these factors include:

• Location - the price of home and condo insurance varies based on the province or city the property is located in.
• Cost of your detached home or condo - the property's face value plays a huge role in determining the price of your insurance.
• Age of property - the older a property is, the higher the likelihood of being seen as high risk. Additionally, older properties have a reputation for being expensive to repair.
• Size of property - As mentioned earlier, the size of your detached home or condo will influence the price of your insurance rates.
• Swimming pools and hot tubs - if the detached home you've been eyeing has a swimming pool or hot tub, expect to see a slight increase in your future insurance rates. The price increases even more if you decide to get an umbrella policy (a policy that covers you if you get sued over a pool-related injury).
• Marital status - If you're married, you may be able to save on your home or condo insurance coverage. Insurance companies see married couples as less of a risk than single home or condo owners (for instance, married couples have less of a tendency to take risks, resulting in claims).

Despite these variables, we can confirm that in comparison to a condo homeowners insurance is generally more expensive. This makes condos an ideal choice for first-time buyers that aren't financially ready to purchase a detached home but still want to feel protected and secure.

Which living space is suitable for you?

Both detached homes and condos come with their fair share of expenses, including insurance. Instead of jumping in with both feet, we suggest that you ease your way into the decision-making process. Doing this will ensure that you purchase a living space that you can enjoy for years or decades.

If you have any questions about homeowners or condo insurance, don't hesitate to reach out to your insurance agent. Your insurance agent can walk you through your potential policies and help you make the correct decision.