Insurance brokers offer clarity and so much more for BC strata owners
With the recent strata insurance rate increases, some might be thinking; does the convenience of strata ownership still offset the complexities of strata ownership? There’s no denying that owning a condo or a town home with multiple parties involved can be challenging. With the latest increased insurance premiums and deductibles, the stakes are even higher. The recent news is forcing even politicians to look at ways to help mitigate these skyrocketing increases. CBC recently reported on the B.C. Liberals pressure province to help condo owners hit by skyrocketing strata insurance.
For condo/townhome owners, it’s critical to understand how insurance works for the strata corporation and the unit owners.
The strata corporation insurance policy
- The buildings shown on the strata plan
- Common property such as hallways, stairs, roofs, pools, garages and driveways
- Fixtures built or installed as part of the original construction, including things like floor and wall coverings or electrical and plumbing fixtures
- Strata assets like furniture and equipment
- Liability of the strata corporation for property damage and bodily injury claims
Unit owner insurance policy
- Personal property such as clothing, household items, furniture and items stored in lockers
- Unit upgrades (betterments or improvements)—such as custom hardwood flooring—made by current and previous unit owners
- Expenses over and above the normal cost of living in the event that the owner is unable to live in their home following an insured loss
- Unit owner’s personal liability for any bodily injury or property damage unintentionally caused to others
The Insurance Brokers Association of BC (IBABC) considers owner liability coverage more important than ever before. Building insurance deductibles are a common expense as per the Strata Property Act. But, should an owner be responsible for damage and loss, the strata is allowed to sue the owner for the cost or repair and or the deductible portion of the claim. The IBABC has seen renewal deductible rates increase from $25,000 per claim to $300,000- $500,000, and in one building’s case, $750,000. As you can see, these increases are very real and, unfortunately ready to negatively impact the unprepared.
Strata insurance rate increase: How did we get here?
It can be hard for some to imagine three hurricanes that pummelled America’s southwest and southeast back in 2017 as one of the reason’s their Vancouver or British Columbia strata building insurance rate dramatically increased recently, but it’s true. Hurricanes’ Harvey, Michael and Irma are just three of many costly global weather incidents that have contributed to the rise of strata insurance rates here in British Columbia and across Canada. Given the large number of strata buildings (over 30,000 in BC) many condo and townhome owners are now learning more about the finer points of the insurance industry and how it works.
Insurers are using computer modelling and other technological advancements to help determine what the cost of premiums should be. They do what they can to keep premiums low, however, they are in the business of assessing risk and preparing for disaster, and are able to transfer the need to maintain reserves for catastrophic losses (over $25,000,000) to other companies known as reinsurance companies. This can make local insurance rates vulnerable to losses occurring in other parts of the world. Going back to those three hurricanes; 2017 was the most expensive year for insured losses caused by weather-related events since 1980 according to Munich RE, the world’s largest reinsurance company.
On the local front, other factors are contributing to increased strata insurance rates. The number of claims have increased because the number of strata developments have increased. Aging strata buildings, owners with an aversion to spending money on system upgrades, construction cost increases and high property values are also contributing. There’s not much strata owners can do about the next climate related disaster a half a world away, but they can take valuable steps to minimize risk here at home.
Consult the experts
With strata insurance rates and deductibles skyrocketing, a condo/town home owner can’t afford not to meet with their insurance brokers, just as strata councils can’t afford not to invite their brokers to the next council meeting. Brokers will help owners with minimizing risk by conducting a comprehensive policy review, and for smaller strata’s, the can also help save some money.
“I was approached to quote a strata currently under a strata insurance program. This is a small complex of only 9 townhouse units, just under $4MM TIV (total insured value), and I was able to place it.” said Reliance senior account executive, Laurie Kay, “ The original underwriter had $10,000 deductible , with $25,000 for water and flood. I was able to write a policy with a $5,000 deductible and $10,000 deductible for water and flood, and saved the client $4,000. In this current insurance market, it is still possible for strata owners to save some money.”
- Keeping owners informed of any and all insurance policy related issues as soon as possible
- Review the strata’s depreciation report to ensure the strata is meeting regulatory requirements
- Ensure all owners have access to the water shut-off to their units, and have upgraded washing machine hoses to braided hoses
- Address injury risks like broken sidewalks, faulty stairs, poorly lit spaces and all security issues
For unit owners, the IBABC recommendations
Working closely with your insurance brokers ensuring your unit has the correct insurance coverage and any optional coverage unique to the unit. Owners should understand the strata building’s coverage, limits, deductibles and by-laws and share that vital information with their broker
If an owner has been lucky to never have had an insurance claim, there are certain situations that may not be at the forefront of their mind regarding insurance coverage. This why it’s so important to consult with an insurance broker, because they think of everything that you haven’t thought of. Reliance Insurance advisors are just a phone call away. Call 604-255.4616 for your risk assessment