What you need to know about Insurance increases.

As most of you may have seen on the news some strata owners in BC are facing insurance rate increases of between 50% and 300% this year, according to the Condominium Home Owners Association of BC.

Deductibles to cover claims are also rising. In some cases, we’ve heard of deductibles increasing as high as $250,000 to $500,000.

While not all regions of the province have been affected in the same manner, there 

have been targeted building types or large strata communities across BC that have seen the dramatic increase.

Why are they increasing?

When a water failure or fire occurs in multi‐unit buildings multiple units are often affected.  The result is an increased risk of cost for damages and losses by the insurance industry. In addition, with a limited number of insurers, increase in claims, higher property and construction values and a high demand for insurance, a supply/demand imbalance has been created where the insurers have imposed much higher costs and deductibles to manage risks. Also, many strata buildings date back to the 1970s and ’80s and strata owners may be reluctant to undertake major system upgrades until problems occur.

What you can do about your strata insurance

Given these rising rates, strata owners should ask their strata corporation or manager for a copy of the corporation’s certificate of insurance. This document details current deductible amounts.

Strata owners should show the certificate of insurance to their insurance provider and understand what their liability would be in the strata, if the insurance doesn’t cover the deductible.

Strata property owners should also:

- Have a unit owner’s insurance policy;

- Have a policy that covers the higher deductible (insurance deductible insurance) to cover a loss in their unit; and

- Understand the risk of not having enough coverage.

Remember that insurance doesn’t cover claims under the deductible amount. So, for example, if a plumbing incident were to cause $75,000 in water damage to a strata owner’s unit, and the strata’s deductible was $100,000, then insurance wouldn’t cover the claim. In such a scenario, the owner could have to pay for the damages out of pocket, depending on the strata’s bylaws.

What Should Buyers Consider

If your’e looking to purchase a property make sure to obtain a copy of the strata insurance documents and confirm the insurance cost, deductibles and policy costs up front.

Government Intervention

The Insurance Bureau of Canada and the federal government are discussing regulations for condominium insurance.

In Alberta, January 2020 changes to the Condominium Property Regulations (Section 62.4) limit condominium corporations seeking to recover the deductible portion of the corporation’s insurance claim to $50,000 from a condo owner for any damage originating in a suite or private area.