Interest Rates, Weather and Water

September 2021

Three seemingly unrelated factors are conspiring to increase insurance rates for condominium corporations and building residents.

At one time a condominium corporation’s insurance policy may have included a $5,000 deductible.  Today that deductible could reach $150,000 and require higher premiums.

Insurance providers are finding traditional sources of profit on the decline.  To remain viable they are finding it necessary to increase premiums, establish higher deductibles, and deny coverage to high-risk condominium corporations and residents.

Interest Rates

At one time insurance companies were able to sustain losses in automobile coverage with investment income.  Low interest rates have eliminated this possibility.  Until such time as interest rates increase to their historical average investment income will not recover making it necessary for all insurance classes to be profitable.

Weather Changes

Future weather is expected to include more severe storms, more water and increased damage.  Communities that fail to ensure their building remains resistant to water and other weather conditions are at greater risk of increased internal and external damage.

Avoidable Water Damage

Most water damage occurs from preventable leaks in a building.  Damaged pipes, lack of preventative maintenance and careless residents can all be addressed so that water damage is reduced.

Insurance companies are reluctant to provide coverage to condominium corporations and residents in buildings with a high incidence of   water-related insurance claims.  Premiums have increased and deductibles are higher.  Some condominium corporations may be required to modify by-laws to ensure personal insurance plans include coverage for these higher deductibles.