If you own a Condo in Vancouver you are probably aware that your Strata Insurance Costs have increased this year. Really increased. (Check out the 2 attachments at the bottom of this article)
Today let’s talk about Insurance. Specifically, the spike in Condo Strata Insurance rates in 2020. So I recently heard from the Property Manager of our building that our Insurance rates would rise by 30% this year.
And my immediate reaction would probably be like your immediate reaction, wow, that’s going to hurt, but why?
Because of everything that is happening in the world today. Global warming isn’t happening apparently! All these catastrophes, forest fires in BC, California and Australia, flooding. around the world. These are just naturally occurring weather patterns.
But sadly, those naturally occurring weather patterns are costing us all money because homeowners are losing their properties to these disasters.
So this is costing the Insurance Companies money. When the Insurance companies are losing money, they need to increase their rates to be profitable.
So that’s what’s happening right now, we are being caught in a squeeze. And the companies are trying to find out, how much do we need to raise the rates to be profitable.
Why is that important to you as a Condo owner, or if you are thinking of buying a condo in Vancouver?
It’s important to know what the deductible is of the property that you are considering buying. Because the Insurance companies are coming back and increasing deductibles from $25,000, to as high as $250,000 per claim to as high as $500,000 to $750,000.
If you are thinking of buying, you need to know what the Insurance coverage is like on the building, and what exposure will you have.
You need to be aware when you are buying a property in Vancouver, buying Condos specifically, what’s the exposure?
Some of the newer condos, the wood frame buildings. Condos that have failed to keep up with the maintenance of their buildings. They are at risk.
So, unfortunately, you might have some owners who don’t want to put money back into the property. Well guess what’s happening now. The Insurance Companies are assessing the risk, and they’re asking those questions, they’re asking the property management companies, what work has been done on the property in the last year?
Insurance Companies are all about risk, underwriting risk, and having no risk. The Strata Board, if they haven’t kept up with maintenance repairs in the building, they can come back and say guess what, you haven’t done the repairs required so your deductible is going up.
What does this mean? Well, you are self-insured for that deductible amount. If it’s $100,000, and your Strata has a claim. You are now responsible for paying that first $100,000 of costs before the Insurance Company kicks in their share.
It’s not the end of the world. As a new owner, you just need to know what costs you may incur down the road and be properly prepared. No surprises!!
I have a couple of PDF’s below from BFL Canada. Some good information with regards to the current state of Insurance locally and what you need to know.