Condo owners’ insurance in Ontario increased an estimated eight percent in 2020 which is nearly eight times the rate of inflation. Ontarians are fortunate this is lower than the 20 percent increase in Alberta and 18 percent in British Columbia. Increases are unlikely to abate.
Increases are due to aging infrastructure, more severe weather, fewer insurers and insufficient internal community measures to control building insurance costs.
Communities are making changes to reduce building insurance costs by passing costs to individual unit policies. That standard unit bylaw ensures unit upgrades are not paid by building insurance when damaged. A higher deductible ensures smaller claims are filed under personal insurance policies and not payable through building insurance.
More severe weather is causing greater damage. Two of Canada’s top six extreme weather events occurred in 2020 – a January 10 rainstorm and snowstorm, and November 15 windstorm. Overall, total damage claims from severe weather events in Canada have risen from $422 million in 2008 to $2 billion in 2020.
Fewer insurers are available for condominium insurance. Some have left the market to focus on more profitable areas.
Barry Herberman of Condominium Insurance Solutions summarizes this succinctly; “Insurance premiums for individual units are continuing to increase due to the escalation of claims in this class of business. The new mantra is that “water is the new fire” and condo units have a high exposure to water damage claims.” This is in addition to higher condo fees necessary to pay for the increased cost of building insurance.
Mr. Herberman provides sound advice for unit owners and condominium corporations seeking to control their insurance premiums. “The only solution to rising insurance premiums is to reduce the volume and value of individual claims. Since water is the leading cause of damage in high-rise communities, building-wide and personal unit water detection systems are encouraged to more quickly identify small water leaks before they grow and cause unnecessary damage. Other measures include better quality connections for dishwashers and clothes washers” and regular inspections of all valves and connections. Finally, find ways to reduce what are known as nuisance claims. When owning a car, some will pay out of pocket for small claims to avoid significant increases to premiums and deductibles. Condo boards and owners can take a similar approach to dealing with smaller claims.