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Understanding Increasing Strata Insurance Rates and Deductibles

Understanding Increasing Strata Insurance Rates and Deductibles

Strata owners in BC are facing insurance rate increases of between 50 and 300 percent this year, according to the Condominium Home Owners Association of BC.

Deductibles to cover claims are also rising. In some cases, we’ve heard of deductibles increasing as much as $500,000.

Remember that insurance doesn’t cover claims under the deductible amount. So, for example, if a plumbing incident were to cause $75,000 in water damage to a strata owner’s unit, and the strata’s deductible was $100,000, then insurance wouldn’t cover the claim. In such a scenario, the owner could have to pay for the damages out of pocket, depending on the strata’s bylaws.

Why are rates increasing?
Strata building insurance premiums are increasing for a variety of reasons, according to the insurance industry. These include an increase in the number of claims, in the cost of repairs and rebuilding, and in the growing number of strata developments. Many strata buildings date back to the 1970s and ’80s and strata owners may be reluctant to undertake major system upgrades until problems occur.

REALTORS® Advice

Given these rising rates, strata owners should ask their strata corporation or manager for a copy of the corporation’s certificate of insurance. This document details current deductible amounts.

REALTORS® will advise strata owners to show the certificate of insurance to their insurance provider and understand what their liability would be in the strata if the insurance doesn’t cover the deductible.

Strata property owners should also:

have a unit owner’s insurance policy;
have a policy that covers the higher deductible (insurance deductible insurance) to cover a loss in their unit; and
understand the risk of not having enough coverage.
Realtors should also include a “Subject to insurance confirmation clause” in contracts.

The Strata Property Act Part 9 requires strata buildings to be insured for the full replacement value of all common property, common assets, and fixtures.

Information provided by REBGV

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Cherie Carpenter

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