Rising strata insurance rates across B.C. are leaving condo owners responsible for enormous bills. The cost of strata’s building insurance is passed to homeowners in their maintenance fees and, if the unit is rented, it is likely to be passed on again to tenants.
This increase is very hard on condo and townhouse owners in B.C. with insurance rates spiking anywhere from 50% to 300%. The Condominium Home Owners Association of B.C. says close to 300 stratas have already seen large insurance rate increases.
This increase could potentially affect 8,000 to 10,000 strata corportations across the province.
HOW ARE OWNERS AFFECTED?
A strata title is described as the individual ownership of part of a property or lot with shared ownership in the remainder of the building. Because of this the rise in premiums for a building can affect condo and townhouse owners in many different ways. Many owners could see a hike in their strata fees. A building's insurance is a common expense that's approved annually and paid through the owner's monthly strata fees. Some owners because of this could see hikes of 20% or more. Owners will also likely see a hike in their homeowners insurance rates. If a building's deductible goes up, the owner has to be covered for the new, higher amount. That will translate into higher monthly premiums for owners.
With the higher deductibles many strata corporations may try to avoid filing a claim through the building's insurance, which means the owners could be responsible for the damage, either through the building's owner-contingency fund or through special levies on individual lots.
Currently, there is no limit for how high a deductible can go.
WHY ARE RATES GOING UP?
A lack of competition in the insurance market across North America, combined with massive payouts that insurance firms have had to shell out due to increasing severe-weather events damaging buildings, have led to the premium increases.
The hike in rates began happening around October as that's around the time many strata corporations renew their insurance. An increase in property values, a reduced number of insurers and rising costs for insurance companies are also to blame. All these conditions have come together over the last three to five years. Although there are currently about 65 insurance companies in B.C. it's hard to know how many actually offer strata insurance policies.
WHAT CAN OWNERS DO?
The most important thing owners can do is make sure their building dramatically reduces the number of claims. Implementing risk-preventative rules such as no-smoking, forbidding barbecues on balconies or ensuring fire sprinklers have protective cages, will help lower rates. Properly maintaining a building's roof or drainage system, for example, are also good ways to lower the risk of a claim.
Whether you are living or interested in purchasing a strata home the following sites will give you more information to make informed decisions.
How do strata corporations and owners manage the dramatic increase in insurance rates? Condominium Home Owners Association of BC
Strata insurance rates are rising. Here’s what strata councils and unit owners can do. Insurance Brokers Association of BC
Acknowledgements: Some of the resources for this article came from the following links. Please visit for more information.