Condo Insurance Costs Skyrocket

[officedweller]

Originally Posted by jlousa

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.

That happened to a friend of mine.
Minor leak and they ripped down the all around the bathtub.

[cairnstone]

Originally Posted by officedweller

That happened to a friend of mine.
Minor leak and they ripped down the all around the bathtub.

The insurance company adjuster is the one that dictates most if not all of the restoration costs and what gets done. Any extra done comes out of the restoration company.

[rofina]

Originally Posted by officedweller

That happened to a friend of mine.
Minor leak and they ripped down the all around the bathtub.

Fair - but things are never as simple as they appear any more.

If your friend claims hes getting sick from mold, in 3 years, and they open up around the tub to find plenty of black mold, the restoration company is getting a call and an insurance claim is imminent. Next thing you know terms like "negligence" and "compensation" start flying around.

Its all about liability (and profit too!) these days. Common sense is out the window, blatant profiteering and overly cautious approach is in.

No one wants to be held liable for anything down the road, the simplest approach is to over build everything to limit risk, common sense and costs be damned.

[misher]

Just got a notice that our garbage contractor is raising his fee by 10%. Insurance hiked by 51%. I think I'm going back to being a renter. Renters have no idea how good they have it. I was renting a 630sqft 1 bedroom for $900 a month just two years ago and making bank.

[WarrenC12]

Originally Posted by misher

Just got a notice that our garbage contractor is raising his fee by 10%. Insurance hiked by 51%. I think I'm going back to being a renter. Renters have no idea how good they have it. I was renting a 630sqft 1 bedroom for $900 a month just two years ago and making bank.

Free market baby!!!!

Good luck getting anything remotely close to that deal renting.

[s211]

Originally Posted by rofina

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.

Almost every NYC building has multiple concierge / doorman staff, so right there alone it's hard to compare.

[Changing City]

It's years since I lived in a condo, so I have no idea what this means in cost terms. Obviously insurance cost increases for a strata corporation of 50% or more means an increase in strata fees to cover those higher costs. How much of a typical strata fee is the strata corporation's insurance cost? If a condo owner pays $500 a month in strata fees is the amount covering insurance $20? $50? more? It might not be a huge increase to cover this higher insurance, but I really have no idea.

The bigger issue seems to me to be the much higher deductable. That means any strata owner 'responsible' for an insurance claim (overflowing bath, for example, or badly plumbed replacement dishwasher) then that owner could now be on the hook for a bill of $100,000. They might have insurance to cover it - although I bet those personal insurance costs are going up as well - but my understanding is that they don't have to have insurance. That could leave the strata on the hook for the cleanup costs and then pursuing the owner for the deductable, through the courts if necessary. That would seem to require much more in a strata's contingency fund for eventualities like this, if it's going to be responsibly managed.

[Sheba]

Originally Posted by Changing City

The bigger issue seems to me to be the much higher deductable. That means any strata owner 'responsible' for an insurance claim (overflowing bath, for example, or badly plumbed replacement dishwasher) then that owner could now be on the hook for a bill of $100,000. They might have insurance to cover it - although I bet those personal insurance costs are going up as well - but my understanding is that they don't have to have insurance. That could leave the strata on the hook for the cleanup costs and then pursuing the owner for the deductable, through the courts if necessary. That would seem to require much more in a strata's contingency fund for eventualities like this, if it's going to be responsibly managed.

Owners aren't required to have their own insurance but it's recommended at the AGMs here. Once we had a situation where the owner didn't have insurance - strata paid their share and the owner was on the hook for the rest. I'm pretty sure they wasn't happy about it but more importantly the rest of the owners took notice that strata wasn't going to pay for absolutely everything.

My insurance only went up $1 this year.

[Vancouverisfalling]

Originally Posted by Changing City

The bigger issue seems to me to be the much higher deductable. That means any strata owner 'responsible' for an insurance claim (overflowing bath, for example, or badly plumbed replacement dishwasher) then that owner could now be on the hook for a bill of $100,000. .

Yes, then consider the multiplier effect of every year the possibility of something happening. Bottom line is owning a Condo will in all probability, over the long haul, become obscenely expensive.

[Changing City]

Originally Posted by Vancouverisfalling

Yes, then consider the multiplier effect of every year the possibility of something happening. Bottom line is owning a Condo will in all probability, over the long haul, become obscenely expensive.

That seems a bit extreme - depending on your definition of obscenely expensive. It's possible owners insurance will be more expensive, and it will still be wiser to have condo insurance than not, but it's only likely to get more expensive if an owner has made a big claim. Premiums would probably be raised if the insurer thinks they might make another because of some inherent risk. Alternatively they might increase the deductible, or decline to offer insurance, but most owners don't make claims - and Sheba's experience is that condo insurance for owners hasn't gone up yet.

[jlousa]

Strata insurance is the single biggest expense in almost every stratas operating budget, even higher then concierge costs in most cases. What is happening is going to have huge effects for years to come. What most stratas are doing is offsetting thier costs as much as possible by raising their deductibles. A lot of stratas currently renewing are actually going to a 250k deductible and still seeing double digit %increases. The individual will get have to increase their deductible to compensate and the increase from the standard 25k to 250k this year is minimal about another $25-50yr... but that is because the individuals insurance policys have never had to pay out that much. Within a couple of years of claims it's expected that's the individual policies are going to skyrocket by close to 100%. Might be a good time to see the banks get into the insurance game.

[Vancouverisfalling]

Originally Posted by Changing City

That seems a bit extreme - depending on your definition of obscenely expensive.

100K Minimum Deductible. Do you understand the ramifications of this? I don't think you do. It means condo owners effectively don't have insurance.

For this same reason Strata Fees are going to rise much higher, not tomorrow, but over years. Not decades, years.

The higher insurance costs pale in comparison to the effects of the insane increase in deductible costs.

[Vancouverisfalling]

Originally Posted by jlousa

Strata insurance is the single biggest expense in almost every stratas operating budget, even higher then concierge costs in most cases. What is happening is going to have huge effects for years to come. What most stratas are doing is offsetting thier costs as much as possible by raising their deductibles. A lot of stratas currently renewing are actually going to a 250k deductible and still seeing double digit %increases. The individual will get have to increase their deductible to compensate and the increase from the standard 25k to 250k this year is minimal about another $25-50yr... but that is because the individuals insurance policys have never had to pay out that much. Within a couple of years of claims it's expected that's the individual policies are going to skyrocket by close to 100%.

This......
Like I said. I think it will take a few months for condo owners to realize how serious and expensive these changes are going to be for them. But they will, whether by figuring it out or experiencing it when they get their insurance bill.

[Cypherus]

Like jlousa stated, many stratas are opting for higher deductibles than higher monthly fees. Our strata deductible increased from $100K to $350K. It was egregious. Any building damage up to $350K is now on our hook as special levy assessments. The strata has also indicated to owners that they need additional insurance to cover a potential chargeback of stata deductible of $350K if your unit is held responsible for damage. Most insurers do not offer chargeback protection up to $350K. So many owners are furious.

[cairnstone]

Originally Posted by Cypherus

Like jlousa stated, many stratas are opting for higher deductibles than higher monthly fees. Our strata deductible increased from $100K to $350K. It was egregious. Any building damage up to $350K is now on our hook as special levy assessments. The strata has also indicated to owners that they need additional insurance to cover a potential chargeback of stata deductible of $350K if your unit is held responsible for damage. Most insurers do not offer chargeback protection up to $350K. So many owners are furious.

And depending on the bylaws any moneys owed in fines and levies have to be paid before maintenance fees so the unit is in default and will be liened and a foreclosure by default will occur when the owner renews morgage.

Condo unit insurance is not much different than rental insurance as it does not cover any common property. You have to get a rider for deductible to cover the strata. Also strata insurance only covers original grade flooring cabinets etc. So you also would need a rider for that also and have a lawyer specializing in insurance to look at the what is covered.

We had a flood in our unit once caused by the roofers. Damage was some what minor do to quality products but none of the damaged flooring was covered or millwork. I was glad i had cork floor left over to replace the damaged area and the crown molding. My policy covered water ingress from everything except a trade hired by the strata. Go figure as it would have been a cash positive claim. They fix your unit as it was and sue the strata sub trade.

[WarrenC12]

Originally Posted by Changing City

It's years since I lived in a condo, so I have no idea what this means in cost terms. Obviously insurance cost increases for a strata corporation of 50% or more means an increase in strata fees to cover those higher costs. How much of a typical strata fee is the strata corporation's insurance cost? If a condo owner pays $500 a month in strata fees is the amount covering insurance $20? $50? more? It might not be a huge increase to cover this higher insurance, but I really have no idea.

The bigger issue seems to me to be the much higher deductable. That means any strata owner 'responsible' for an insurance claim (overflowing bath, for example, or badly plumbed replacement dishwasher) then that owner could now be on the hook for a bill of $100,000. They might have insurance to cover it - although I bet those personal insurance costs are going up as well - but my understanding is that they don't have to have insurance. That could leave the strata on the hook for the cleanup costs and then pursuing the owner for the deductable, through the courts if necessary. That would seem to require much more in a strata's contingency fund for eventualities like this, if it's going to be responsibly managed.

There's a bit of misinformation floating around here. I'll give you 2 examples from buildings I'm very familiar with in the downtown area.

Typical insurance premiums have been around $100k/year, now increasing to $130-$140k. Both examples are similar, with stratas running $1M-$1.2M budgets annually. So $40k is not huge, but it's 3-4%, which is basically the most any building will tolerate for regular increases, for no noticeable change in quality of living, and sometimes the coverage is worse(!).

In both cases, they are not the most expensive line items. That falls to heating/hot water. Concierge 24/7 will be more expensive as well, many buildings have a combo of concierge and security. Consider that 24/7 is like 4 full time people + benefits, etc.

Deductibles have always been high relative to an individual unit. Even at $25k, that's a ton of money to have to pay out of pocket if you cause a water leak. Stratas always recommend coverage but I'm unsure if they can actually enforce a bylaw requiring proof of insurance.

I updated my coverage from a $20k to $25k deductible as our policy changed, and also updated my earthquake deductible, which is separate and much higher (~$60k I think, based on unit size). Net change in my personal premium was $12 for the year.

And yes if the strata is "on the hook" in some way for costs, they can go all the way to forcing a sale on your unit to recover.

[Changing City]

Originally Posted by WarrenC12

There's a bit of misinformation floating around here. I'll give you 2 examples from buildings I'm very familiar with in the downtown area.

Typical insurance premiums have been around $100k/year, now increasing to $130-$140k. Both examples are similar, with stratas running $1M-$1.2M budgets annually. So $40k is not huge, but it's 3-4%, which is basically the most any building will tolerate for regular increases, for no noticeable change in quality of living, and sometimes the coverage is worse(!).

In both cases, they are not the most expensive line items. That falls to heating/hot water. Concierge 24/7 will be more expensive as well, many buildings have a combo of concierge and security. Consider that 24/7 is like 4 full time people + benefits, etc.

Deductibles have always been high relative to an individual unit. Even at $25k, that's a ton of money to have to pay out of pocket if you cause a water leak. Stratas always recommend coverage but I'm unsure if they can actually enforce a bylaw requiring proof of insurance.

I updated my coverage from a $20k to $25k deductible as our policy changed, and also updated my earthquake deductible, which is separate and much higher (~$60k I think, based on unit size). Net change in my personal premium was $12 for the year.

And yes if the strata is "on the hook" in some way for costs, they can go all the way to forcing a sale on your unit to recover.

Thanks for explaining the costs. I'm guessing as you're in a newer, concrete building your strata's insurance will be one of the more reasonable quotes. In stratas that are older, that might be different. I'm also guessing that for self-managing smaller stratas the insurance could be a higher proportion of the strata expenses, so it won't be 'one size fits all'.

The explanation from insurance brokers (on the web) also talk a lot about climate change / weather impacts on overall insurance claims that the industry has had to pay out in the last couple of years. On the east side of the country that's going to be a big factor already, but places like Richmond might be viewed as having potentially higher risks as well.

[WarrenC12]

Originally Posted by Changing City

Thanks for explaining the costs. I'm guessing as you're in a newer, concrete building your strata's insurance will be one of the more reasonable quotes. In stratas that are older, that might be different. I'm also guessing that for self-managing smaller stratas the insurance could be a higher proportion of the strata expenses, so it won't be 'one size fits all'.

One building is a ~20 yr old concrete tower, the other is 3 yrs old, concrete as well, both over 200 units. Wood frame I can imagine is an issue.

In the 3 yr old building we've had 1 major claim, early on. Nothing in the last 2 years, but the increase is the same as the rest of the market.

Actual strata management in terms of a property manager is not that expensive for the value. It is only 1 person after all, and they look after multiple buildings. Having warm bodies sitting in a lobby and/or patrolling at night ads up, as does energy of any kind.

Originally Posted by Changing City

The explanation from insurance brokers (on the web) also talk a lot about climate change / weather impacts on overall insurance claims that the industry has had to pay out in the last couple of years. On the east side of the country that's going to be a big factor already, but places like Richmond might be viewed as having potentially higher risks as well.

That sounds like a cop out to be honest. We have an earthquake policy that will pay construction costs to rebuild, but the deductible is huge. Internal flooding due to resident error and/or pipe failure represents the vast majority of costs. The higher up it is, the worse it will get as it floods down every unit, and has the potential to ruin elevators.

The last building I lived in (rented), some clown tried to install his own bidet on floor 30+. It flooded down about 25 floors, with damage to 1-3 units on every floor. I can't imagine the final bill.. several hundred thousand I'm guessing.

[Vancouverisfalling]

Originally Posted by WarrenC12

There's a bit of misinformation floating around here.

No, there isn't. You're making the assumption that your particular circumstances are representative of the whole, which they are not.
The misinformation here is by you, as you are leading people to believe these examples are the norm, which they are not.

[Vancouverisfalling]

Originally Posted by Changing City

Thanks for explaining the costs. I'm guessing as you're in a newer, concrete building your strata's insurance will be one of the more reasonable quotes.

Exactly, but funny thing about new buildings is, they turn into older buildings pretty fast, at which time they no longer will be offered the reasonable quotes.