Severe Weather = Increases in Condo Building Insurance

July 2015

It is getting more difficult for condo corporations to obtain insurance. Those able to obtain insurance can expect to pay more.

In Calgary, The Cooperators is getting out of the business of providing insurance for condo corporations. They have stopped renewing existing policies in Western Canada and Quebec. They plan to do the same in Ontario and Atlantic Canada.

Those still providing this coverage in the Calgary area are increasing rates by 25% to 35%. Some condo corporations have seen deductibles increase from $5,000 to $25,000 with some as high as $100,000.

The Calgary area has experienced an unprecedented increase in damage claims over the past couple of years. Increased claims are being blamed on recent severe weather and condo resident behaviour.

Condo resident behavior can affect the number and value of claims. It can also impact on building quality and maintenance issues which also impact on claims.

A survey of Quebec condo corporations found that 13% were refused a renewal by their insurer. The same survey found that 55% changed insurers over the prior five years because of higher premiums.

Condo corporations with fewer and lower value claims are seeing lower increases. Buildings which can effectively reduce claims by preventing water damage, for example, are more likely to obtain coverage at lower cost and with lower deductibles.

With multiple severe weather events in Toronto over the past couple of years, more area condo corporations are likely to experience difficulties in obtaining insurance.

Insurers paid out nearly $1 billion due to heavy Toronto area flooding on July 8, 2013. Rates are increasing, and coverage being reduced, to make up for insurance company losses. Homeowners are already being notified that their coverage is being reduced by as much as 60%. Others are finding that their rates have increased by as much as 40% despite having no damage claims.

Insurance deductibles as high as $100,000 have been reported in Vancouver.

Proactively undertaking initiatives to reduce water related damages, such as installing better quality water hoses to appliances and sealing pinhole leaks, could go a long way to ensuring your building can continue to obtain insurance coverage in the coming years.

Severe weather is not the only reason for higher building insurance

Other Factors Causing Higher Insurance Premiums and Deductibles

  • Insurance claims have increased due to construction techniques which have resulted in lawsuits
  • There is the potential for higher repair costs to deal with water leaks
  • Glass towers with floor to ceiling windows instead of walls will require more money for repairs
  • Aviva, a major property insurer, reports that most condo corporations lack sufficient reserve funds to deal with major issues
  • With the increasing levels of debt, owners may be unable to pay special assessments of $15,000 to $25,000 to repair structural issues and water leaks when they occur