Condo board floored by 120% rate increase

One insurer refused to cover the building because it is registered among Canada's Historic Places

Condo board floored by 120% rate increase

Construction & Engineering

By Mary Or

When York House, a 129-year-old building in Fredericton, New Brunswick, was first converted from the city high school to a condominium in 2012, insurance was “in the order of $3,500 a year,” condo board president Greg Gillis recalled in an interview with CBC. “[It] went up a little bit a few years later to about $5,000 and then another few years later went up to $10,000.”

So, Gillis was stunned when, opening a notice from the insurance provider last spring, the cost of insurance had jumped to $22,000 a year – more than double what the condo board had previously been paying.

The building was built in 1893 and is registered among Canada’s Historic Places. It was for this reason that one insurer Gillis approached refused to cover the building.

But Gillis believed insurers were confusing the building’s historic status with a heritage designation, which York House lacks. “It’s not the same thing, but that’s not making a difference to them,” he said.

Chris Wiebe, manager of heritage policy and government with relations with the National Trust for Canada, explained to CBC:“The insurance industry is an extremely hard market, and it’s having to pay out huge claims in extreme weather events, and now they’re going to real extremes to minimize any other risks they can.

“Older properties with unknown factors or risks, real or perceived, are being questioned or rejected. So I guess older buildings I think in general – not just designated heritage buildings or ones that have been included on inventories – are becoming, unfortunately, a target," he added.

Wiebe also suspected that there was confusion over what requires replacement after a building has been damaged.

“If it is getting stuck around this whole notion of replacement cost and the replication of features, then it would be time to connect with people at the provincial and municipal level to really look at those requirements in designation bylaws or other requirements to try to work with insurers to assuage their concerns,” he said.

According to the Condominium Act, a condo building must have insurance. The board sees to this, and the members pay the board for it. Members must also insure their own units.

Fredericton Councillor Bruce Grandy has asked that the issue of rising insurance rates and denial of insurance policies on heritage buildings be taken into consideration as the city’s heritage bylaw comes under review, CBC reported.

The National Trust has launched a survey to gain more information about where and why this is happening.

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