Why the huge increase in strata insurance premiums?
Owning a condo, townhouse, or any kind of home within a strata could come with a hefty price these days. Sure, there are a lot of benefits to buying into a strata. You probably don’t have to worry about mowing the lawn. It’s a nice access-controlled community, and there are a lot of things you don’t have to personally worry about taking care of because it’s all covered. But with insurance rates going up so high, strata owners are now potentially facing huge bills.
Strata building insurance is passed to homeowners, or if there are renters, it’s passed on to the tenants. The burden is not something anyone really wants to face.
There are an estimated 10,000 strata corporations across the province that will be affected by the increased strata insurance premiums. There was even a real estate insurance brokerage who advised its Vancouver strata corporation clients to budget for a 25% plus increase in insurance costs. Some renewals have reportedly increased by an incredible 50% to 300%.
Why are they going up?
Strata building insurance premiums are seeing a significant increase for a variety of reasons. For example, there have been an increase in the number of claims, cost of repairs and rebuilding, and in the growing number of strata developments.
Since many strata buildings were built in the 70’s and 80’s, strata owners are reluctant to undertake any major system upgrades until big problems arise.
What to do about strata insurance
As a strata owner, you should ask your strata corporation or manager to provide you with a copy of the corporation’s certificate of insurance. Go through the document details carefully to see the current deductible amounts.
If you show the certificate to the insurance provider, they can help you understand whether or not the insurance covers the deductible. As a strata property owner, you should make sure you have a unit owner’s insurance policy, have a policy that covers the deductible, but whether you choose to have these or not, you should at least have an understanding of the risk of not having enough coverage and the impact it could have.
According to the Strata Property Act Part 9, strata buildings are required to be insured for full replacement value of all common property, common assets, and also fixtures.