What you need to know about strata insurance rate increases
Strata owners in BC are facing insurance rate increases of between 50 and 300 per cent 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 much as $500,000.
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.
Why are insurance rates increasing?
Strata building insurance premiums are increasing for a variety of reasons, according to the insurance industry. These include an increase in the number of claims, in the cost of repairs and rebuilding, and in the growing number of strata developments. 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 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.
The Strata Property Act Part 9 requires strata buildings to be insured for full replacement value of all common property, common assets, and fixtures.
Government intervention in Alberta
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.
Realtors across the country are working with their professional associations to explore ways to mitigate problems related to this issue.
For example, Realtors in BC are advocating for a requirement for stratas to provide their insurance documents to prospective home buyers. This would ensure that you know about deductible and policy costs up front.
We also know that the Insurance Bureau of Canada and the federal government are discussing regulations for condominium insurance.
- How do strata corporations and owners manage the dramatic increase in insurance rates? (Condominium Home Owners Association of BC)
- Strata insurance rates are rising (Insurance Brokers of BC)