There has been some news recently about the dire concerns consumers are having regarding BC’s condo insurance market. These concerns are mainly due to the very large and skyrocketing increases in condo building insurance premiums, and in some extreme cases condo buildings not being able to get approved for any insurance policies at all! Read below to learn more.
Condo Insurance Rates Increasing 50-300%
It has come as a shock to most BC condo apartment owners that their overall condo building insurance may increase up to 300%, drastically increasing their Strata fees. As absurd as a possible increase of 300% may sound, some of the explanations given do seem somewhat reasonable.
Why The Drastic Increase In Condo Insurance?
There are two main reasons why condo building insurance policies are increasing so drastically; skyrocketing property values, and increases in overall risk.
Skyrocketing Condo Value Assessments
We’ve all heard about the skyrocketing real estate prices that BC has experienced in the last 5-10 years. These large increases in property and real estate values may have increased the net worth of many long-term property owners in BC, but it has also increased the costs it would take an insurer to replace or re-build the building in the case of accidents or disasters. The more expensive the property, the more expensive the insurance to cover it is, so as property value skyrocket so do the insurance policy rates.
Increasing Risk From Climate Change
On top of the skyrocketing property values in BC is the increase in risk from natural disasters like earthquakes, fires, floods, storms, and more. As more of these natural disasters occur, more and more insurance claims are submitted, meaning more costs and risks for insurance companies. To make up for these increases in costs and risk, insurance companies need to increase rates.
Worst Case Scenario? Your Condo Building Can’t Get or Renew Any Insurance At All
In some very extreme cases, some condo buildings in BC have been denied and unable to find building insurance altogether. This is a very extreme case, but has huge impacts on the condo unit owners of these buildings because banks require the building to have proper insurance in order to finance any mortgage. Therefore, if the condo building does not and cannot get proper insurance coverage, then new potential buyers cannot get financing from banks to finance any new purchases; leaving condo unit owners in a tough spot when it comes to trying to sell their unit to a new buyer. Also, even condo unit owners who don’t want or need to sell their units of these non-insurable buildings are at risk, as no bank wants to be exposed to that kind of risk, so there’s the possibility of having current mortgage financing from banks pulled.
What Can Consumers Do?
Unfortunately, there isn’t much condo unit owners can do if their condo building cannot get properly insured. The best they can do is appeal to the government for intervention. Being in constant contact with the condo buildings’ Strata council as well as your bank and insurance company is also recommended in order to stay in the loop of what is happening and what the possible options for resolution are.
Contact HIP Today
If you have any questions or concerns about this, we encourage you contact us at HIP today to speak to one of our knowledgeable insurance reps. We’d be happy to do our best in answering any question that you may have.