The rate comparison site LowestRates.ca predicted has noted that the Home Insurance Price Index for the second quarter of 2021 had condo rates skyrocketing in British Columbia and Alberta in particular, with quarterly increases of 22% and 10%, respectively. In November 2021 they predicted a persisting rise in condo insurance premiums through the first two quarters of 2022.
There is no doubt it has been a hard few years for condo insurers and owners but condo insurance premiums in Canada actually appear to be stabilizing after facing unprecedented deductible amounts and premium increases.
The State of Condo Insurance in 2022
According to Peter Kennedy, Aon senior vice president and national director, real estate practice for Canada, in a recent interview with Canadian Underwriter, he said “For nearly three years, the Canadian condo insurance market has been enduring “some really tough challenges” in terms of premium and deductible increases. “That was just a result of prolonged depressed rates, low deductibles and claims … that eventually just caught up quite frankly and to the point where insurance companies were consistently losing money all across their whole book in this particular sector.”
The simple fact is the losses of a few are spread over many and the Condominium segment has had a lot of large water losses. One sprinkler leak, dishwasher hose, or overflowing bathtub can damage many units. This drives up the cost of claims.
If your building is older, requires maintenance, is in a flood zone, has inferior construction or is already experiencing water problems you can expect to continue to see increased premiums and higher applicable deductibles.
Are condo insurance rates really getting better?
For those good risks with better preventative measures in place and good claims history, we are starting to see some stabilization. As long as there are no catastrophic events experts are predicting, for good risks, rates should hold. We are already seeing some reductions in strata deductible amounts.
It is important to realize the other contributing factor to rating a strata building and that is the cost to rebuild. While rates might be flattening, construction costs and thus replacement costs are still rising in B.C. and this will mean your strata will need more coverage to be fully insured and this could be the next reason we see rates change.
When purchasing a condo, thoroughly review the meeting minutes and claims history and discuss all with your insurance broker to see any impact the history or condition of the building may have on your insurance needs.
If your building has plans for improvements remember that the increased value will result in higher insurance premiums and plan ahead for that inevitability.
Regardless of stabilization within the market segment, you still need to be sure you have covered off your strata deductibles and pay special attention to the water and earthquake deductible exposures you face.
We can help you every step of the way. Get a quote for condo insurance today.