Strata and Condominium insurance coverage in British Columba has recently faced some serious increases in premiums. Of special note in B.C. is that duplexes, triplexes, townhomes, patio homes and condominiums are all considered a Strata Unit.
Many factors have led to this increase, here are a few:
1. Insurance premiums have been rising for all types of coverage, including homeowner insurance.
2. Condo/Strata insurance premiums have been very low for a long time.
3. The rebuild cost if an entire condominium complex is destroyed can be astronomically high in some areas.
4. Water-related losses are the number one claim from Strata to Insurance companies.
5. Some Strata have used insurance claims to provide maintenance to their buildings
6. Fewer insurance companies want to take on the risk of insuring condominiums.
The hardest-hit Strata complexes are going to be complexes that are extremely expensive to rebuild, self-managed Strata buildings, Strata buildings that do not have a depreciation report and Strata buildings that have had a lot of claims.
Ways that Strata Councils can save on their insurance premiums are
1. Have depreciation reports to provide to the insurance companies. This provides confidence that due diligence of maintenance is being conducted by your strata.
2. Increase the deductible for a loss. When I lived in Vancouver our deductible was $50,000.00. Some Strata complexes have deductibles as low as $2500
3. Ensure all hot water tanks are less than 10 years old, that plumbing for dishwashers and washing machines are up to date and to modern-day code, deal with any water leaks immediately, regardless of how small.
4. Ensuring there are a minimum of insurance claims presented by the strata corporation.
5. Weigh the cost of remaining self-managed versus hiring a property management company.
As a consumer, you can protect yourself by purchasing a Strata Unit Owner’s Policy. This covers the strata’s deductible, contents insurance, liability and coverage for any unit upgrades that you may have done. You can purchase earthquake insurance, jewellery and art riders and other additional insurance add-ons.
If you are planning on purchasing a Strata Unit, the below clause is something you should consider when putting in an offer. This will ensure that you are afforded the opportunity to review the strata insurance documentation and that you are able to receive proper insurance coverage for your purchase.
This offer is subject to (A) the Buyer reviewing and approving the terms and rates of the strata corporation’s insurance, including the premium amounts, deductible amounts, and coverage limits thereunder and the date of expiration of such policy or policies; and (B) the Buyer confirming the Buyer’s ability to obtain personal strata owner’s insurance on terms satisfactory to the Buyer, including coverage for any owner’s portions of deductibles payable under the strata corporation’s insurance, in each case on or before ________________. These conditions are for the sole benefit of the Buyer. Immediately upon execution and delivery of this Contract of Purchase and Sale by all parties, the seller or the Seller’s agent will obtain copies of the strata corporation insurance policy or policies, and will immediately, upon receipt, deliver such document(s) or cause such document(s) to be delivered to the Buyer or the Buyer’s agent.
If you are selling a Strata Unit, I would strongly recommend that you obtain the Strata Corporations insurance policy to have readily available to potential buyers. If you can provide certainty around your strata premiums that will give you a leg up against other competing strata unit sellers.
For further information please speak with your Insurance company. The below link is a guide to Condo Insurance in British Columbia and is provided by the Insurance Bureau of Canada