Firstly, you’ll need condo and townhouse insurance if you’re taking out a mortgage to buy your unit. Banks and mortgage lenders in Canada require that you have insurance before approving a mortgage loan. Also, your condo association may require you to have proof of condo coverage before moving in.
Even though your condominium corporation has insurance, this policy won’t protect you and your belongings. For example:
Although the building is insured by your condominium/strata corporation’s policy, it will not cover your personal belongings in the unit or storage locker. Your furniture, entertainment equipment, electronics, and other valuable belongings will not be protected.
Your condominium corporation’s policy only covers items that are part of the building. You need your own insurance to protect the upgrades you have made or acquired inside your unit, such as better carpets and built-in cupboards.
Your condominium/strata corporation can make an assessment against you for any damage caused to your condo building, common areas, or other units, whether the damages were your fault or not. For example, water damage to a neighbouring condo after your plumbing pipe burst; or damage to the lobby due to a fire that started in the utility room. Your condo insurance will cover you for the assessment levied on you by the condo/strata corporation in these examples.
Finally, you need to protect yourself against personal liability for injuries any of your visitors may sustain in your home, or for damage you accidentally cause to a neighbour’s property. Liability also protects you against lawsuits for events that may occur on or away from your home.