B.C. condo owners are bracing for sticker shock amid surging insurance rates for their homes.
“Rates are increasing for people in policies now anywhere from 50 to 300 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.
The reasons for the surging rates are multiple, but one of the factors is the sky-high value of B.C. properties.
Gioventu said in the case of a devastating fire, claims for a large strata building can be massive.
“To insure full risk for one building, one building may have a $100 or $200 million dollar value to it, that’s an enormous risk for a single insurer,” he said.
As a result, the number of insurers willing to take on policies for B.C. condos is shrinking, particularly if the building has made multiple claims or has not kept up with maintenance, Gioventu said.
Paul Murcutt, BFL Canada Insurance Services Inc. said the growing cost of insurance isn’t just a B.C. issue.
“The three main factors are global catastrophes, increasing claims cost for the segment, and the earthquake risk profile for British Columbia,” he said.
Devastating natural disasters such as wildfires in California, or hurricanes on the East Coast, while far away, are making their impact felt here in B.C., said Murcutt.
That’s because of the way insurance companies deal with risk. Big insurers buy insurance against the policies they sell to clients in order to insulate themselves from possible major payouts.
With growing disaster-related payouts, that’s affecting the global reinsurance market, Murcutt explained.
“The reinsurance rates that insurance companies purchase increase, and that has a trickle down effect on the consumers,” he said.
With rates climbing, Gioventu said it’s incumbent on would-be homebuyers to look into the insurance situation with any property they’re interested in.
“Anyone now purchasing into a condo and into any strata corporation in B.C., one of the documents you want to request is a copy of the insurance policy,” he said.
“Look at what the renewal date is, look at what the values are, the deductibles, what the rate is. And if it’s coming up to a renewal, you might want to wait a bit.”