You may have seen in the news that some strata corporations are facing substantial increases to their insurance rates and deductibles, marking a significant time for BC’s condo landscape. Some strata corporations are seeing premium increases on renewals between 50% and 300% while some deductibles have increased from $25,000 per claim to $250,000 or $500,000 per claim, and in a few cases, more.
Although most of the rising deductibles reported in the news are mainly being imposed on high-rises and higher risk buildings (those with a history of claims), many buildings of all sizes, in all communities are seeing the impact of growing insurance costs for strata corporations.
While insurance industry stakeholders, government and consumer groups meet for crucial discussions, here’s what condo unit owners want to know and steps you can take to help protect your financial well-being.
Why are strata corporation deductibles increasing in such a big way?
As the number of condos in BC increases, some commercial insurers are discontinuing their coverage for strata/condo properties. With fewer commercial insurers willing to take on policies for strata corporations, the remaining commercial insurers are either charging high premiums, increasing deductibles or lowering limits—or exercising a combination of the three.
This will particularly impact buildings that are deemed risky, for example, they’ve made multiple insurance claims or have not kept up with maintenance.
Then, add the risk of earthquakes in our province, increasing costs of rebuilding due to expensive construction rates, along with older condo buildings starting to show their wear and tear, and that means the cost for a commercial insurer to provide coverage to strata corporations may continue to rise.
How does this affect me?
Many condo unit owners are facing increases to annual strata fees to cover the jump in their strata building’s insurance premiums. If you have a strata policy, you should also prepare for increases in the next year.
In the event that a strata corporation’s deductible is assessed to the condo unit owners when a claim is made for damage to the condo development, higher deductibles for strata corporations means more responsibility will be passed on to condo unit owners. And that responsibility can be even more substantial for an individual unit owner if, depending on their strata’s bylaws, they’re deemed responsible for a claim made against their strata corporation’s policy and the strata decides to charge the entire deductible to that individual.
Personal insurance coverages, like BCAA’s insurance policy includes Strata Insurance Deductible Coverage which can protect against these costs. If your strata building’s deductible increases, you may require more coverage to take care of your share.
With insurance deductibles increasing for strata corporations, it’s also likely that more claims will fall below such high deductibles. In cases like this, depending on your strata bylaws, your strata corporation would typically pay for the cost of repairs for damage to the strata property or may assess the cost to condo unit holders. However, if there’s resulting damage to your unit, you’ll have to pay for those repairs yourself. BCAA’s insurance policy includes Strata Property Damage and Unit Additional Protection Coverage which can protect against these costs.
What can unit owners do to weather the tough condo climate?
1. Make sure you’re protected.
First and foremost, it’s important to have your own condo insurance whether you’re living in the condo yourself or renting it out to tenants. Condo insurance provides coverage for assessments of your portion of your strata corporation’s insurance deductible when a claim is made. BCAA Condo Insurance automatically includes Strata Insurance for Deductible Coverage (from $25,000 up to $100,000) and Strata Property Damage Coverage.
2. Understand your liabilities.
- Request a copy of your strata corporation bylaws to understand what liabilities, including repair and maintenance obligations, fall on you as a unit owner. Check who can be held financially responsible (negligent or not) if the cause of damage originates in your unit.
- Obtain a copy of your strata corporation’s building insurance policy every year. This policy should be provided at your strata corporation’s annual general meeting or you can contact your property manager for a copy. Note the strata building’s deductibles, including those for earthquake and water damage, and check them each year for any increases.
3. Ensure you have adequate insurance for your belongings and your strata’s insurance deductible.
- Take an inventory of your belongings in your unit and storage locker, including any significant upgrades such as new flooring or kitchen cabinets so you know how much coverage you’ll need.
- Review your condo insurance policy against your strata corporation’s policy to see if there are any gaps, which includes checking that you have sufficient coverage to protect you from a high strata deductible. If you need help, bring in copies of your strata’s insurance policy and bylaws to any BCAA Service Location and speak with one of our insurance experts.
4. Always ensure you renew your insurance on time so that you’re covered at all times.
What else can I do to protect myself?
- Reduce risks. Ask your strata council to develop ways for residents to reduce risks of damage in their suites and the building.
- Take precautions to avoid mishaps in your own suite by:
- Adopting technology, such as water detection sensors, flow meters and shut-off valves to protect against water damage.
- Not running the dishwasher or washing machine when you’re not present or are asleep.
- Practicing fire safety which includes having a fire extinguisher in your unit, ensuring your fire/smoke alarms work properly and not leaving open flames such as lit candles unattended.
- If you have questions about your policy, speak with your insurance advisor. If you want to learn more about condo insurance and want to bring in a copy of your strata building’s insurance policy and bylaws, speak with a BCAA insurance expert.