Freehold vs. Condominium ownership- What you should know

The main difference between freehold and condos is how the properties are owned. If it’s freehold, the owner owns the house and the grounds. They are responsible for all the maintenance to both its interior and exterior. Owners are free to decorate and renovate how they please.

On the other hand, condo ownership means the homeowner owns the unit and shares ownership of common elements. Condos are usually apartment buildings, but can also include townhouse developments and/or detached buildings on private roads.

The condo association is responsible for the upkeep of the building’s exterior and common interior elements as well as the grounds. All condo owners pay a monthly fee to the association to cover maintenance, common utility fees and taxes. Condos often have strict rules regarding noise, use of common areas and renovations to units.

Condo insurance 101

Condominium association insurance – The association carries insurance for the buildings and the land on which the complex sits. Although specific coverage varies from corporation to corporation, it typically covers common areas such as the lobby, elevators or gym. In addition, infrastructure features such as sidewalks or plumbing, are usually protected under this policy. The condo corporation will maintain the outside and the exterior of your unit is covered by the master condo policy. Tip: An association policy does not cover anything inside your unit, including storage lockers.

In addition, it’s important to understand your condominium association’s policy because there may be rules that stipulate if a loss begins in your unit (a burst pipe) you could be responsible for the entire shared insurance policy deductible and even some of the costs to repair the damage. That’s where your personal insurance policy can help offer protection.

Individual condo insurance – This insurance policy covers the interior of your unit for fire, smoke, theft and liability. That includes clothing, appliances, furniture, upgrades and items stored in your locker. It could also include other riders for expensive art, jewelry or musical instruments. The policy will typically cover personal liability for any bodily injury or property damage unintentionally caused to others. And, in the event you can’t live in your unit because of an insured loss, additional living expenses.

While individual condo insurance is not mandatory, it only makes sense to protect your investment.

Freehold Insurance 101

Because you own everything, your insurance needs are different. You homeowner’s insurance policy – whether it’s a freehold townhome, semi-detached or detached home - will recognize your complete ownership of the building(s) and the land.

A typical homeowner’s policy will help you to repair or replace your home and belongings if they are damaged by certain perils such as fire, wind, hail and theft. It will likely help you cover costs if you accidentally damage your home, another person’s property or if someone is injured while at your home.

But in this case, you should also consider adding additional coverages for things such as overland water and sewer backup if your base policy does not already include it. That’s because water damage is one of the leading causes of insurance claims. There’s also additional coverage available for valuables, such as jewelry, that would be above additional coverage limits.

As you can see, there isn’t necessarily a one-size fits all homeowner’s policy. Talk to a broker who can help you customize your coverage for the best protection for what you value most.