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Two ways to address rising condo insurance premiums


February 11, 2020   by Jason Contant


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One broker association is calling for consultation among all key stakeholders to discuss owner liability in condo corporations, with a focus on proposed achievable legislative action.

As condominium (strata) insurance premiums and deductibles continue to rise across the country, the Insurance Brokers Association of B.C. (IBABC) is recommending two key reforms to the Strata Property Act:

  • A $50,000 cap on loss assessments (which may not apply in cases involving negligence)
  • The addition of a standard definition of a strata unit.

“IBABC recognizes these changes won’t directly address the rising strata-building premiums and deductibles, but they are foundational pieces to that issue and the long-term stability of the B.C. strata insurance market,” the brokers association said in a press release Friday.

Condo corporations across Canada in many cases are receiving notice of premium and/or deductible increase on renewal of their existing insurance policies. In B.C., the broker association reports renewal premium increases between 50% and 400%. Deductible increases are up from $25,00 per claim to $250,000, $500,000 and, in one case, $750,000 for water-related losses.

“There are also cases of strata buildings without insurance coverage for water losses,” IBABC reported, noting that stratas in the province are required to have insurance for full replacement cost. Some strata corporations and unit owners have been left vulnerable as they scramble to find adequate coverage.

IBABC says that by introducing an upper loss assessment cap (for deductible assessment and non-insured loss assessment), it assists strata lot owners in accessing adequate and affordable insurance to protect themselves from potentially unmanageable financial loss.

“Higher premiums and higher deductibles increase the burden on the unit owners,” said IBABC president Troy Wotherspoon. “They are likely looking at increased strata fees to cover the big jump in strata building insurance premiums. Plus, subject to bylaws or strata council decisions, stratas can charge back the deductible, or the full cost of a repair if it is less than the deductible, to an owner who is deemed responsible for damages. That’s now potentially hundreds of thousands of dollars, and it’s nearly impossible for a unit owner to find insurance coverage for a deductible that high.”

Deductibles and coverage is further complicated by a lack of a “standard unit definition” in B.C.’s Strata Property Act, the broker association said, arguing that a “bare bones” standard unit definition should also be introduced as part of the act. This definition would encompass the structural components of the unit, such as walls, ceilings, drywall, sub-floor, basic electrical, plumbing and some HVAC components, including the requirement to meet applicable fire and building codes. It would not include most finished items, such as floor finishing, carpets, countertops, plumbing fixtures, appliances, and any upgrades beyond the bare bones definition, which would then be clearly the unit owner’s responsibility to maintain and insure.

“Having a legislated standard unit definition would greatly clarify the responsibilities of strata building insurers via their offered insurance policies versus the responsibilities of strata unit owners and their insurance responsibilities,” IBABC said. “This clarity would assist with proper insurance-product pricing and start the journey back to stability for the strata insurance market in B.C.”

These two recommendations could protect millions of strata unit owners from further risk of losing their homes and likely help mitigate future insurance market cycles, IBABC said.

Over recent years, strata corporations have benefitted from a highly competitive insurance market with unsustainably low premiums. But rates tend to follow market cycles and as the insurance market hardens, strata corporations are also experiencing and increasing frequency of claims with increasing costs of repairs. This is exacerbating upward pressure on rates and availability of coverage.

Metro Vancouver has approximately 2.7 million residents, with about half residing in strata-titled properties. Within B.C.’s strata property classification, there are now more than 30,000 strata corporations. “These numbers reflect the significance of the current strata deductible increases and the challenges posed to millions of strata unit owners.”


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6 Comments » for Two ways to address rising condo insurance premiums
  1. Marc Lefebvre says:

    Standard Unit definitions have been applied in other provinces, where it typically ends up that all within “bare walls” become unit owner improvements. When this risk is shifted from the Condo Corp. to the unit owners, the limits on the Condo Corp.’s policy must be reduced to reflect the transfer of risk from the Condo Corp’s master policy to the unit owners improvements and betterments coverage. Transferring the risk to unit owners without reducing the master policy limits, results in redundant coverage and ends up costing unit owners more.

  2. Val says:

    Ridiculous price increases….government should be looking into this. Extortion from Insurance Companies again!

    • Local Governments are encouraging high density housing in there regions to allow afford able housing in there communities. In Langley alone thousands of condos have been constructed or in process of being constructed every where. Its the same in every district in the lower mainland, local governments enjoy the tax revenue these projects provided and approve, my question is are they willing to help strata owners who are at risk of losing everything and bearing some of the costs that they are befitting from?

  3. Jigsaw says:

    It’s absolutely ludicrous, ridiculous what heights the government or any organization will go to to extort more money to line their own pockets.
    Do they ever consider that rising insurance costs can make or break someone? An substantial increase is like another mortgage payment. There needs to be stop put to this. It’s no different than ICBC’s agenda. Hike up the rates for everyone when only a few should be penalized.
    Pure bulls**t

  4. John Nieboer says:

    120% increase in premiums and deductibles to unreasonable levels,,,,deductibles more than the value of the condo improvements,,
    It is time to investigate the insurance industry,,,but by whom? Big money,,big cover
    John

  5. Terry Bunke says:

    Our 162 unit building will incur a 200-300% increase due to our location on the river in New Westminster and several water damage claims. I cannot understand how the insurance companies can arbitrarily increase to this degree while all other increases in other markets are on hold by Government decree. Why could they not see this coming and transition the increase?

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