SilverBeam Homes Blog

The Current Condo Insurance Crisis

by Bevony on April 8, 2020 No comments
Condo Insurance Crisis

British Columbia owners of Condos and Townhomes are seeing a crisis with some insurers pulling out of the market. Those that remain are hiking up their prices. In a bid to address the problem, the relevant authorities recently held an online meeting. The meeting lasted for 4 hours and addressed the crisis that is facing BC stratas regarding building insurance. Condo owners are seeing the price of insurance increases, as well as insurance options, are simply disappearing. Meeting attendees came from various sectors of the market. They included officials from real estate, insurance, government along with other businesses and other stakeholders. The meeting took place online in light of the current COVID-19 crises. 

One-third of the residents in British Columbia live in townhouses or condos. They are faced with this crisis of wether their building will be able to find insurance. There is also the problem of affording the premiums when they do find an insurer. This along with the COVID-19 pandemic is putting a lot of stress on the residents.

Don Forgeron, the CEO of the Insurance Bureau of Canada noted that it is unfortunate that no immediate relief could be reached. The Insurance Bureau of Canada noted that this crisis did not just occur overnight. They also note they have made recommendations to both the stratas and the government. However, currently, time is necessary to bring forth the required change. They note these measures will provide help in the future. They are also, hoping for spillover into the short term and medium term. The impact of these changes for right now is hard to measure or predict.

Horror Stories from Residents

Over the last few months of 2020, residents have shared a number of horror stories. With approximately 1.5 million British Columbians calling strata corporations their home, a large majority. Residents told stories of increases of up to 400% in their insurance fees. They also noted a staggering increase in deductibles. We heard stories of buildings only receiving partial policies and in some cases, while some received no policies at all. 

British Columbia is not the only province in Canada that suffered a hit. Notably, though, it is the one that has taken the hardest hit. This is because of the large number of stratas that are contained in British Columbia. Factors that affect this include;

  • Where the stratas are built
  • The standards to which the stratas are built
  • Type of construction used for the buildings
  • British Columbia’s risk of earthquakes

These factors make this a bigger problem for British Columbia than that of other provinces.

One metro Vancouver condo owner of 16 years shared her story. Her building’s insurer notes they will not be renewing the policy. Because of this, her strata council will have to find a new insurer. As she lives on a fixed income, this owner is fearful of any increase to her fees that may arise from the strata finding new insurance. 

Many residents are facing similar issues and they are looking to the government for protection. We are all looking for concrete action from the government. It is expected that more stratas will start experiencing these problems as the future unfolds. As a result, there are more people paying attention to the details of this conversation.

Recommendations from the Insurance Bureau of Canada

  • Making education for risk mitigation mandatory for strata councils 
  • Amending building codes to prevent extensive water damage with the mandatory installation of leak detection devices
  • Passing legislation to avert Stratas from deferring depreciation reports
  • Prevent strata from putting off long-term maintenance with proper legislation
  • Make definitions in the Strata Property Act to define a “standard strata”
  • Make it clear in the Strata Property Act what damages are the responsibility of the strata lot owners separate from those of the strata council

Current Measures to Address the Crisis

The Minister of Finance, Carole James, noted that they are in the process of exploring ways to address the crisis. A spokesperson from the ministry further tells how discussions are underway with the Insurance Bureau of Canada. The main focus of these discussions is to ultimately make strata insurance costs more affordable.

The BC Financial Services Authority is the insurance regulator for the province. They are continually gathering data on the rate hikes and average increases across the province. They intend to determine how many of the 300 British Columbia insurance companies have stopped offering services to condos and townhouses.

This also affects renters of townhouses and condos as their landlords may have to pass the increases to them. Forgeron notes that no one should be forced from their homes because of these insurance issues. As such they are motivated for a solution to be found and implemented soon. We hope that the changes made will attract insurers to come back to the BC market. We hope that with demand taken care of, the cost of insurance will fall to more affordable prices.

The matter is indeed urgent and we can only hope that the government will heed the recommendations of the Insurance Bureau. We hope the necessary changes will be made to help keep BC residents in their homes.

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BevonyThe Current Condo Insurance Crisis

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