Condo Insurance Costs Skyrocket
 

50-300% Increase for Condo Insurance, PLUS, and even worse, the MINIMUM deductible raised from 10-20K'ish, to 100K-500K

So...Condo owners are paying through the nose to effectively have no insurance, if they can even get it at all, as Insurers are pulling out and older buildings or buildings that have had even one claim find it very difficult to find an Insurer.

Condos just became the plague. Way too much risk and uncertainty, not to mention cost.

https://globalnews.ca/news/6237709/b...surance-surge/

Our strata insurance costs are up 46% YoY.
Deductible up to $50,000 as well. Most downtown towers at $100,000+ deductible already.

All to do with the insane amounts of losses insurers take for even a simple flood repair. Especially when you have an older building with lead paint, asbestos, etc. Simple flood repair turns into a 100K+ repair.

Multiply that across millions of units and it becomes an unbearable cost.

On top of that, and this isn't spoken about, insurance companies are essentially investment companies. They make money on investing premiums and limiting losses.

There is a very limited amount of places to invest capital right now and gather a return that's acceptable. As investment vehicles world wide make their way towards zero% yields look for a whole lot more of this.

All that being said, to call condos the plague is pretty far out there. Condo and strata ownership is already the bulk of ownership and will continue to have a outsized portion of the market as cities continue to double down on density.

Well this could certainly put and end to the condo party. I had a friend say they had a $3,000 unit assessment just to get their building insured! Many can’t find that kind of money every year but if it goes into annual budgets maintenance fees will skyrocket.

Doesn't help that the restoration companies come in and tear everything apart because it might of seen water, and play the black mould scare. They are extremely overzealous as they know once it's apart it will require fixing and hence more money.

I think it will take a few months for people to realize just how serious these changes are and how much risk one takes simply by owning a Condo in Vancouver.
And remember, this isn't a "One and Done" deal. This is permanent. Strata fees are going to be totally unpredictable except to assume they're going up, way, way up for a long time.

Oh it is worse than what is in the article. Any strata over 200 units for the last 10 or so years have been limited to 1 or 2 underwriters. When I had my town house and sat on the board about 4 years ago we were hand tied then by the insurance company. We saw an almost doubling of our premiums in one season do to I believe a hurricane. And also the brokers limit you on shopping around. premium value is released just before your policy is do so you cant shop around. We tried to shop around and was told sorry we are already attached to the underwriter through the investment vehicle. As insurance is a house of cards with every one reinsuring each other.


So basicly insure A writes policy and then sells to B C D E F. B C D E F then insure the the deductable so you have no real option besides pay up

That's an exploitative way to make a buck. I hadn't thought about them being overzealous but can easily see how that would happen, plus what's the homeowner or strata going to do? Refuse to "adequately" restore the water damage? That's just inviting a denied claim or lawsuit in the future.

The strata act will need some legislative changing. Right now, buildings are required to maintain coverage.

Some will certainly turn to self insurance. We saw rates go up 40% last year with zero claims, but maintained our $25k deductible.

This is more about the investment climate in the insurance industry as mentioned earlier. The dollars and cents of insuring multi-family buildings hasn't changed dramatically.

Insurance has also consolidated over the last several years, which leads to more monopolistic behaviour in the marketplace.

Has there been any news about this from other jurisdictions in North America? You think places like Toronto and New York would be feeling it too.

I have heard it's nationwide (in Canada), but I'm not too knowledgeable on the industry as a whole.

Florida insurance has been a gong show for decades, and climate change risks are being mentioned as a cause in our increases as well.

How old is your condo btw? Is it wood or concrete?

I don't think this is a one-glove-fits-it-all issue.

I've been told wood=worse
lowrise=worse
Richmond=worse
claims history=worse

Combined with property tax and utility increases Vancouver just got a massive spike in unaffordability that's being focused on Owners which can't be passed on to tenants. This is going to kill our rental market.
https://shawglobalnews-files-wordpre...fees.png?w=720

Right - the issue has remained the same. BC is not known for proper Strata management or budgeting.

Our Strata fees in the province, as a blanket statement, should be at least twice what they are on average.

We very much do not allow enough for contingency, preventative maintenance and general cost increases such as seen with insurance this year.

One only has to look at maintenance fees for mature high rise markets to see where Strata fees could be headed - take a look at NYC. $600 a month for a small 1 bed is pretty standard. That same condo in Vancouver would be paying $250 on average.

2016, wood.

Its a complicated issue, no doubt.

BC itself is incredibly inefficient. We build buildings that were not meant to be maintained. Who the hell puts a planter on every level outside the balcony railing and expects the strata to maintain it?

I don't think strata fees are wrong. $200-$300 a month in a 100+ unit building is fine as long as the concierge doesn't soak up too much of it. If the building is well built and older so its less complicated under $200 a unit is possible while putting 10% annually in your CRF. What happens now though is buildings do whatever the engineer says, and hire an engineer for every problem. In addition they use expensive restoration companies, Owners constantly abuse the strata, and they are just plain poorly managed. Strata managers have no schooling/experience with actual maintenance and the standards for them are incredibly low along with the pay while work hours are high. They have no actual incentive to save the building money while their ass is on the line if anything goes wrong. Plus pay is low and abuse is rampant. They are employees of the company rather than the strata so there's no worker protections for them, Council's are free to, and have often abused them. I saw one where a crowd of Owners jumped him and another was shot downtown. Recently downtown a caretaker was murdered. Council members take out all their mental problems on the strata manager because they know they can get away with it. Who wants to work 60-80 hours a week for $50,000 with constant night meetings, 24 hour emergencies and verbal abuse? Pay has actually gone down rather than up. Your basically a bus driver with lower pay, less perks, longer hours, and more responsibility. If you wonder why your strata manager sucks, its because the way you treat him is awful. I treat property managers very nicely and am always patient. Give them a gentle reminder by email if something is slow or missed. And make sure you give them a Christmas bonus. Mine hadn't gotten one from our strata in 12 years.

https://www.cbc.ca/news/canada/briti...ouse-1.4529740

Long term solutions are needed.

People are going to be living in condos in increasing numbers for years to come, this isn't going to magically render condos worthless.

Condos and Strata buildings all have similar issues with out going into to much detail

1.) Government blanket changes effect all strata corps differently.
2.) Owners are miss lead in believing that their fees will cover all the costs of the strata
3.) Poorly run strata councils that either have a personal agenda or don't want to create burden on anyone
4.) Non transparent management. Hidden partnerships with trades
5.) one of the biggest issues is the fact that all buildings have a half life and these repairs should be planned for and money put aside. Example upgraded windows heating systems. Huge costs especially when the strata is a 60 story building.
6.) Over complicated design and cost cutting during development. Example are heating systems with short life spans, or new products to market with no history.
7.) Strata management is self regulated through the real estate board. So you take the course from UBC and you are trained no real experience needed.

I used to have a few contracts with stratas directly and also though the maintance company. Both had there issues.

And yes - its comical that we are going to be raising rents by 2% while Insurance doubles and property taxes go up nearly 10%.

Lets see how well this works out long term, particularly now that owners don't have double digit prices increases YoY to soften the blow.

Hopefully it may tip the scales into constructing more rental than condos, if people start to realize the personal cost implications. Also, city council should drop their multi-family fetish and instead start carving out small single family lots from current suburban sized ones. Look at how small some of the surviving SFH lots downtown were.

LOL no.