As a condo or townhouse owner in B.C, your home insurance is broken down into two distinct categories:
- The insurance you pay with your strata fees for coverage on the overall complex structure and common areas.
- Your own personal insurance for your unit and the contents within your home.
For many, this means leaving the strata insurance portion up to the strata members to find & secure the best option. As a homeowner, it is up to you to ensure the best insurance coverage for your home.
The condo insurance market in B.C has been feeling some pressure lately. As happy as some condo or townhouse owners may be to have had secured (possibly very affordable) insurance for their home or building, it’s still very important that owners take a pro-active approach to ensuring that they have full coverage for their property’s up to date value. This goes for all homeowners.
Local Underinsured B.C Condo Owners Face Hefty Levy After Fire
After a fire caused major damage to a local B.C condo building, owners were dealt stiff bills between $36,000 to $57,000 each in the form of levies . This was due to the complex being underinsured with its current condo insurance policy by $3 million. When it comes down to who is to blame, it starts to get very messy, and the road forward seems unclear. This is an example of why homeowners need to be proactive when it comes to their insurance coverage.
Underinsured Homeowners Definition
An insurance agreement is based on a specific asset and the value of that asset (among many other things, like risk). If the value of the asset being insured changes, then the insurance agreement needs to be adjusted accordingly. For example, if a property increases in value over time, then the insurance to cover that property should be relatively more expensive. If the property’s value is not fully re-evaluated properly in relation to the insurance coverage, it may be underinsured.
The difference between an asset’s current value and the amount covered in an insurance contract (if there is a difference) is called the property’s underinsurance gap. Every property’s value will be different, so their underinsurance gap and risk will be different as well. A condo building may be worth many millions, so it may face the risk of being underinsured by millions too. A million-dollar home in B.C, however, may be at risk of being underinsured by tens or hundreds of thousands of dollars. Either way, it’s not a good situation to be in as an owner.
How Does Underinsurance Happen?
If a property’s value and insurance coverage is not fully re-evaluated every year, then it faces the risk of being underinsured. Year after year, many insurance policies get renewed without a full re-evaluation of the asset being covered, it’s true current value, and what it would really take to repair or replace the property today in the case of any major damages. Coverage providers can and do estimate changes in the property’s value (and risks), but these are just estimates. This means that there are currently many properties in B.C at risk of being underinsured.
Avoiding Underinsurance For Your Property
The best advice to avoid underinsurance for your property is to stay in close contact with your coverage providers and to ensure that full re-evaluations of your property and insurance policy are done every year along with the renewals. This could mean having to pay for a 3rd party appraisal to be done on the property. It may seem like a hassle, but it is worth the time and effort.
Underinsurance Coverage Protection
Another option to minimize the risks of underinsurance is to get separate coverage protection for it. Although this may mean having to pay a bit more in premiums every month- it is well worth the money, effort & stress saved from having to pay for appraisals and ensure proper full coverage year after year.
Get Free Online Quotes Right Now & Compare!
Here at Harbord, we are the home insurance people! We’d be happy to help answers any questions you may have, so please feel free to contact us today if you have any questions about underinsurance or ensuring your property’s coverage is up to date. We can also offer you free quick insurance coverage quotes online too!