Soaring condo insurance costs spook B.C. realtors
February 27, 2020
Soaring insurance costs for condominium projects and condominium owners has convinced the B.C. Real Estate Association (BCREA) to rewrite its provincial disclosure statements for homebuyers.
The Insurance Brokers Association of B.C. said it has seen premium increases ranging from 50 per cent to 400 per cent for stratas (the legal term used in B.C. for multi-family projects such as condominiums and townhouses), and deductibles of $25,000 per claim increasing to between $250,000 and $500,000.
As a result, BCREA has embedded a Strata Insurance Clause in realtor sales contracts. The clause is meant to “support clients when entering the strata marketplace.” The clause requires a strata unit seller disclose the cost and coverage of the strata project’s insurance.
Soaring insurance costs for condominiums are particularly severe in British Columbia due the number of older condo buildings, some now 40 to 50 years old. Other reasons are an increase in insurance claims in recent years, the high cost of rebuilding, especially in Metro Vancouver, and the expensive finishings used in new condominium projects, insurers say.
Rising costs for condo insurance are not restricted to B.C., however.
In January 2020, new rules came into effect in Alberta that could leave condo owners on the hook for upwards of $50,000 if damage is caused from within their unit.
Effective January 1, Alberta condominium corporations will be able to seek recovery of the deductible portion of the corporation’s insurance claim – up to a maximum of $50,000 – from a condo owner for any damage that originates in their suite or private area.
“That means that if something happens in the unit and it’s not your fault—the toilet explodes, there’s water loss, water damage goes through to the floors below—and there’s a $50,000 deductible or a $25,000 deductible, the owners are now responsible for the deductible,” Todd Shipley, of Reynolds Mirth Richards & Farmer LLP, told a recent meeting of the Canadian Condominium Institute.