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Canada’s Condo Insurance Crisis: Sky-High Premiums Threatening Consumers

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Condo Insurance Crisis

Millions of Canadians love the condominium lifestyle, and for some, it’s more affordable to own and live in a condo complex versus a detached house. Moreover, condo towers offer an agreeable solution to urban density and sprawl – if you can’t spread outwards, spread upwards. Governments fancy them too. After all, condo complexes help satisfy the need for housing in cities while increasing the tax base. What’s not to like?

Unfortunately, a burgeoning condo insurance crisis – driven by a spike in claims and increasing repair costs – has sent premiums skyward for condo corporations, which in turn, may impact unit owners. The demand for coverage is outweighing supply. In other words, some insurance companies are reducing the limits of what they will cover while hiking their premiums. Other insurers with shrinking risk appetites are opting to exit the market altogether. That’s left many condo property management teams struggling to secure insurance with adequate protection at affordable rates.

That presents potential problems for all.

Could the Crisis Affect Condo Owners?

While rising premiums are faced by property management teams, by in large personal condo policy premiums have remained steady and affordable for many years. As building rates soar, however, those costs can be passed onto unit owners through higher condo fees and deductibles.

Another factor registering in escalating premiums is climate change.

Insurance companies put dollar values on weather events. According to the Insurance Bureau of Canada, catastrophic loss claims (losses topping $25 million) totalled an average of $405 million per year between 1983 and 2008. Over the next decade (2009 to 2018), the average annual cost of catastrophe losses reached $1.8 billion per year.

That is especially true in regions of the country where catastrophic risk is increasing. For example, the threat of an earthquake in Ontario, Quebec, and British Columbia. Or wildfires in Alberta and B.C., as well as floods in many provinces.

The Cost of Condo Insurance

Insurance companies are not offsetting their risk concerns toward individual condo owners yet, keeping restrictions focused on corporations. That means condo insurance in Canada remains affordable for most owners.

Your condo’s property management team will have insurance to cover the building’s common areas, and it may provide a limited amount of coverage for some items in your unit like the interior walls. But you need to make up the shortfall to protect your belongings. For example, if a fire damages your unit and possessions, it’s your personal condo insurance policy that will cover the cost of things such as furniture, electronics, and clothing.

Many factors determine the cost of condo insurance, including where you live, coverage options, restrictions, and deductibles. For most Canadians, condo insurance will cost about $250 to $350 per year for $50,000 of contents coverage.

Having coverage means you are financially prepared should the worst happen. Depending on your policy’s coverage, condo insurance provides:

  • Coverage for your belongings
  • Temporary living expenses if your unit is uninhabitable during a claim
  • Personal liability coverage in the event someone is injured in your residence or if their property is damaged
  • Loss assessment coverage supports you in the event you are held financially responsible for any damages to the condo building itself and its common areas

How to Reduce the Cost of Condo Insurance

As the Canadian condominium insurance market moves through a period of volatility, the importance of finding the right coverage at the right price has become doubly important. Condo owners can follow some simple steps to ensure the best deal possible:

  • Shop around. Shopping for condo insurance gives customers access to the best premiums for their circumstances. By comparing insurance quotes, it’s easier to find coverage that meets your insurance needs at the most affordable price.
  • Combine insurance. Many insurers allow customers to bundle home or condo insurance with car insurance, which may result in a discount between 5 per cent and 10 per cent.
  • Manage deductibles. By choosing a higher deductible, you can lower your overall premium.
  • Take loss prevention measures. Insurance companies like to see their customers take proactive steps protecting their units. For example, getting an alarm system installed, ensuring smoke detectors are working and having a fire extinguisher on-hand.

Other steps condo insurance customers can take include switching from monthly to annual payments, perfecting your coverage limit (only insure what you need), and maintaining a good claims record.

Condo Insurance Is Important

Amid all the debate surrounding condo insurance in Canada, one thing remains crystal clear: Consumers do need coverage. If you’re a condo owner, you need insurance to keep your property and belongings safe. Many landlords will lease their condominiums, and it is equally important for renters to get a tenant insurance policy.

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