BEWARE Condominium (strata) Insurance Premiums And Deductibles Continue To Rise 50-500%
Dated: February 17 2020
Recently there have been a rise in strata insurance premiums througout Canada. None crazier than a newer 26-storey condominium in Abbotsford, BC that was rocked by a 780% increase from its previouse year.
BFL, which insures the aforementioned Mahogany Tower, raised the property’s rates from $66,000 in 2019 to a mind-boggling $588,000 in 2020. Mike Pauls, president of the building’s strata council, said that the increase will affect condo owners in the form of a one-time tax of $3,000 per unit. This does not include the additional monthly costs of $600. The insurer explained that the increase was due to fewer insurance entrepreneurs willing to share the risk of insuring the high-rise building, which is valued at $79 million.
Pauls responded to the insurer, saying that he would have understood a significant increase in premiums if the property was in need of construction or repair. However, the Mahogany Tower has only been occupied for a year. Surrey Now-Leader reported that the strata council instructed the building manager to approach BFL for a better offer. The insurer has since offered a lower premium of $241,000 – but with reduced coverage.
Based on the properties that can be affected the most are; the older buildings with many claims, or the ones that have not kept up with maintenance. They will find it harder to find and insurance company that are willing insure the buildings at competitive rates. This increase in the rates will definitely be passed on the the home owners. Which in-turn could affect the overall value of your home with higher strata fees.
“Rates are increasing for people in policies now anywhere from 50 to 400 per cent, and deductibles are going from the conventional $10,000 or $25,000 to $100,000, $250,000 or $500,000,” said Tony Gioventu, executive director of the Condominium Home Owners Association
There are other factors affecting insurance premiums, such as; less ROI in the financial markets, Increase in claims cost and the earthquake risk profile. Insurance companies are the largest holders of Government bonds, with low interest rates and yields being below the rate of inflation, thats a negative yielding return, making it hard for the insurance companies to make money. These have caused some insurance company to simply walk away and no longer insure condominiums because the risk is to great.
If you are a current strata home owner or looking to purchase a stratafied home, you must be very deligient before falling victim to these astronomical increases. Prior to purchasing a condominium, ask to look at the insurance policy, the renewal date is key, looking at the current rates and deductables. You might want to stay clear of condomium buildings that are up for renewals with 24 months. #jussayin #dogrealtor
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Last Updated: August 1, 2021 5:35 AM UTC
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