IBABC calls for stakeholders to discuss reforms for condo insurance

IBABC calls for stakeholders to discuss reforms for condo insurance | Insurance Business

IBABC calls for stakeholders to discuss reforms for condo insurance

In light of the steep increases to the insurance deductibles of strata corporations – which ultimately impact condo unit renters – the Insurance Brokers Association of British Columbia (IBABC) has released a statement calling for all stakeholders to discuss the issue and find a meaningful way to address the problem.

The broker association noted that many strata corporations across Canada are receiving notice of premium and/or deductible increases upon renewal of their existing insurance policies. Previously, strata corporations enjoyed a highly competitive insurance market, but the hardening insurance market has taken its toll on strata insurance, IBABC observed. The frequency of claims has increased over time, as well as the costs of repairs, exacerbating upward pressure on rates and the availability of coverage.

Read more: Experts react to sky-rocketing condo insurance rates

IBABC reported in its release that it has seen renewal premium increases in BC of between 50% and 400%, and deductible increases from $25,000 per claim to $250,000 and $500,000. The trade association also noted that, in one case, a strata corporation’s deductible was set at $750,000 for water-related losses. There have also been cases where strata buildings did not have insurance coverage for water losses at all.

“Higher premiums and higher deductibles increase the burden on the unit owners,” commented IBABC president Troy Wotherspoon. “They are likely looking at increased strata fees to cover the big jump in strata building insurance premiums.”

Wotherspoon also warned that, subject to bylaws or strata council decisions, stratas can also charge back the deductible or the full cost of the repair (if it is less than the deductible) to an owner who has been named liable for damages.

IBABC has proposed two measures to offer relief to condo unit owners. The association has recommended reforms to the Strata Property Act – a $50,000 cap on loss assessments, and the addition of a standard definition of a strata unit.

IBABC is calling for a “barebones” definition of a unit, referring to its essential structural components (i.e. walls, ceilings, drywall, building codes, etc.). By having a standard definition, it would greatly clarify the responsibilities of strata building insurers, the association explained.

IBABC hopes there will be further consultations with government and key stakeholders on these matters and on the solutions it has proposed.