British Columbia's condo buildings (also referred to as Stratas) have been struck by massive surges in premiums and deductibles. An estimated 2.7 million residents live in strata-titled properties within the Lower Mainland. The Insurance Brokers Association of BC (IBABC) reported that some strata buildings' insurance costs have seen increases between 50% and 300% upon renewal, with deductibles increasing to $250,000 and $750,000 per claim.
So far, condo insurance in Victoria hasn't seen many buildings affected by price surges. But it may only be a matter of time until that changes. In this current crisis, a strata building in Victoria BC, the Shoal Point, saw their condo insurance rates jump from $200,000 to $800,000. Some owners exposed to these BC Strata Insurance shocks are facing $300 - $400 more in fees per month!
Insurance rates tend to fluctuate from year to year in response to market forces and emerging trends. Insurance brokers have become more reluctant to insure condos due to risks that have been increasing the amount and cost of claims on a national scale. IBABC has identified some overall factors for strata insurance premium increases:
1) Growth in B.C.'s strata-housing market.
Long term growth in BC's strata-housing market has created a prolonged and competitive market for strata insurance. Persistent growth in demand, among a shrinking number of insurance providers, has driven premiums and deductible upwards. The Lower Mainland's population growth trends project that 500,000 new homes will be required by 2041, further exacerbating the strata insurance crisis.
2) The number of claims has increased.
History of claims, poor maintenance, increasing building ages, substantial repair costs, multi-unit damages and lack of major systems upgrades are just some of the factors contributing to strata insurance rate surges. A general increase in strata buildings' risk-profiles has seen insurance providers footing larger and larger bills when claims are made.
3) The cost of rebuilding has increased.
The increasing cost of rebuilding has insurers shelling out more money for claims on condos and multi-unit buildings. Legally, Insurance companies must maintain financial reserves to meet their anticipated future claims. With the increasing number of claims and costs of rebuilding in tandem, Insurers are increasing their premiums, deductibles, and reserves in order to endure the market's headwinds.
4) Local markets are affected by increasing global losses.
Many National Insurers tend to be involved in a number of different regional markets. As a result, the impact of fires, floods, and other natural disasters on condos can increase the risk and cost of the insurer's portfolio. Local residents' premiums and deductibles are, in part, being driven upwards from claims that could be either down the street or across the country.
Review Your Strata Insurance Deductible Assessment Coverage
With claims like water damage being the most common, it can be difficult to get a simple answer on who is responsible and what is covered by condo unit owner's insurance and strata insurance in Victoria BC. Thankfully, SeaFirst's team is here to help! Contact us here or keep reading for more information.
Condominium Unit Owners Insurance covers the contents of the individual unit, any additional improvements made (such as custom flooring), and liability for the accidental damage to neighboring units. SeaFirst Insurance offers a comprehensive Condo Unit Owner's Package that is designed for our customers who own their own strata unit! Strata Insurance is purchased by the strata corporation. SeaFirst Insurance's Strata Guard offers different packages that help meet your needs! This policy is designed to protect the interests of the property shareholders (aka the unit owners), typically covering common property such as hallways, stairs, and pipes.
In the event of a claim to common property, strata unit owners may be assessed a certain portion or even the full amount of the Strata Insurance deductible. These deductibles can rapidly exceed $10,000 (especially within this current insurance crisis), so it is wise to review your own condo insurance policy and see what coverage it provides in these instances. Most policies include coverage up to a stated limit for assessed deductibles. In the event that a claim exceeds a strata corporation's policy limits, individual condo insurance policies may provide additional coverage for damage and liability losses to common areas. Check with your broker to see if this coverage is in place and what its limits are.
Not all strata policies are created equally, but knowing what to look for is often complicated. Fortunately, we've put together a free guide for council members to help simplify strata insurance. Regardless of whether your strata corporation is professionally managed or self-managed, we recommend keeping this guide handy for reference.